SINGAPORE: The yen rose on Monday in choppy trading, having dipped initially after a big win by Japanese Prime Minister Shinzo Abe's ruling bloc in upper house elections gave Abe a stronger mandate for his reflationary economic policies.
The widely expected victory gave Abe's ruling bloc majorities in both the lower and upper houses, and was likely to pave the way for the government to pursue pro-growth fiscal policies and structural reforms to go alongside the central bank's aggressive monetary easing.
Gareth Berry, a G10 FX strategist for UBS, saw the dollar strengthening further against the yen longer term.
"I think it's good news for dollar/yen longer term, but it seems like it was mostly in the price before the actual result was announced," Berry said.
Earlier on Monday, the dollar rose to 101.05 yen on trading platform EBS, its highest level against the yen since July 10.
The dollar lost steam after that, however, and later saw a sharp reversal, falling to as low as 99.60 yen. The dollar last stood at 99.92 yen, down 0.6 percent from late US trade on Friday.
Even after Monday's fluctuations, the dollar is up roughly 15 percent versus the yen for the year.
The yen has been pressured by the unprecedented scale of the Bank of Japan's easing, while the dollar has been supported by market expectations that the US Federal Reserve will slow the pace of its monetary stimulus later this year.
Jeffrey Halley, FX trader for Saxo Capital Markets, said Japanese players were spotted selling the dollar versus the yen this morning, adding that traders using algorithmic trading also joined in with yen-buying.
"This has pushed into more stop-losses on dollar/yen and euro/yen in very poor liquidity conditions," Halley said, referring to stop-loss selling of the dollar and the euro against the yen.
The euro fell 0.6 percent to 131.47 yen, down from a two-month high near 132.47 yen set earlier on Monday.
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