The much-anticipated upper house elections in Japan on Sunday will be pivotal to shaping the fate of the country’s currency, which has experienced wild swings in recent months, analysts told CNBC.
Volatility in the yen has kept markets captivated all year. The Japanese currency has fallen about 25 percent against the dollar since mid-November last year when Prime Minister Shinzo Abe first unveiled his intentions for a radical plan to revive the Japanese economy.
Dollar-yen breached the psychologically important 100 level in May before doubts over the viability of Abe’s radical policies and the prospect of U.S. Federal Reserve unwinding its massive monetary stimulus took a toll, bringing the cross back down to the current 93.7 level.
Where the currency pair goes from here, hinges on the outcome of the upper house elections on July 21, analysts say. If Abe’s Liberal Democratic Party (LDP) can gain a majority it should give him extra impetus to push his third arrow through.