Japan’s Prime Minister Yoshihido Noda conceded defeat to incumbent conservative opposition party leader Shinzo Abe after a landslide victory in the polls on Sunday.
The Liberal Democratic Party (LDP) won by a large majority, toppling the Democratic Party of Japan (DPJ) from three years of being in power. The hawkish 58-year-old Abe promised a change from more than half a century of almost unbroken rule by the LDP and pledged to the revive the listless Japanese economy after years of deflation, made worse by a soaring currency that has squeezed exporters.
Abe had a brief stint as premier in 2006-7 and is now back with a mandate to apply more pressure on the Bank of Japan to ease monetary policy, in order to lift the economy out of a deflationary spiral that has dragged on the economy for years. This is effectively printing money and tends to weaken the currency. The yen plummeted against most major currencies when the Asian currency markets opened.
He has also vowed to boost spending on infrastructure to help the tsunami-wrecked northeast.
In a news conference Shinzo Abe said: “I’ve been saying all through the election campaign that I’d like to set a policy accord with the Bank of Japan. It was very rare for monetary policy to be the focus of attention in an election. But there was strong public support to our view. I hope the Bank of Japan takes this into account (at its policy meeting this week) …
“As for the future, my government is created, I’d like to instruct cabinet ministers to work with the Bank of Japan in crafting a joint statement setting 2 percent inflation as a target,” Abe said.
On the political front, Abe pledged to bolster Japan’s defences and stand up to China in a dispute over the sovereignty of islands.
China is challenging the fact that (the islands) are Japan’s inherent territory,” he said. “Our objective is to stop the challenge. We don’t intend to worsen relations between Japan and China.”
Yen hit a 19-month low against the Australian dollar. AUDJPY hit an intraday high of 88.98 yen, its strongest level since May 2011. The dollar rose to 84.10 yen in early trading on Monday, from 83.51 yen in late U.S. trading on Friday.