Japanese PM Hatoyama resigns, finanace minister likely successor

The yen fell today following Japanese prime minister Yukio Hatoyama's resignation. The resignation fuelled expectations that his likely successor, finance minister Naoto Kan would adopt a tough approach in fighting the yen's rise.

Hedge funds shot up on the news of the resignation, pushing the yen lower, but the drop soon lost momentum after the euro fell following European Central Bank board member Christian Noyer's comments in an interview to the German business daily Handelsblatt that the exchange rate of the euro against the dollar was not unusually low.

His remarks came a day after the euro was down to a four-year low against the dollar.

The yen was down to a two-week low against the dollar as investors believed political instability would make the economy more dependent on the Bank of Japan and its easy monetary policy.

Market players favour finance minister Kan, who is also deputy prime minister, to succeed Hatoyama. This would in turn make investors cautious about a higher yen.

Asian stocks ruled mostly lower today after Wall Street fell due to the massive oil spill in the Gulf of Mexico and on news that Japanese prime minister Yukio Hatoyama would resign.