Japanese Yen Weakens in Forex Trading as Political Question Marks Emerge

Once again, another prime minister's government is in doubt in Japan. There has been a great deal of unrest and turnover when it comes to prime ministers in Japan recently, and the latest concerns surround current prime minister Naoto Kan.

GFT's Boris Schlossberg looks at the issues faced by Kan in FX360:

The setback for Prime Minister Naoto Kan’s government indicates that that his ambitious agenda to reduce deficit spending may now be thwarted as the country enters into a period of political turmoil. Japan’s carries the largest debt to GDP ratio in the G-3 universe and although the country is able to finance its spending needs internally, Mr. Kan has been making the case that the current deficit spending trends are structurally unsustainable.

As a result of fundamental issues, the Japanese yen is down against the U.S. dollar in currency trading. Even though the yen is generally considered safe and stable, the mounting debt is a cause for concern, as it is in other developed nations right now.