Bank of America warns of risks for yen amid upcoming elections and tariff increases

According to a Bank of America analysts' report, risks for holders of Japanese yen-denominated assets have increased over the past week. Experts attribute this to two key events: the US tariff hikes and the potential setback for the ruling coalition in parliamentary elections. This information was provided by Investing.com.

Preliminary opinion polls have shown that Japan's Liberal Democratic Party risks losing its majority in the July 20 parliamentary elections. Earlier, analysts at the American bank had predicted such an outcome and noted associated risks for the Asian country's economy.

Additionally, the US plans to increase tariffs on Japanese goods to 25% starting August 1. Bank of America experts believe the tariff increase will necessitate additional government spending and affect the actions of Japan's financial regulator.

Meanwhile, the bank's analysts continue to favor buying USD/JPY and EUR/JPY currency pairs. This decision is linked to the fact that non-commercial traders at CME maintain a net long position on the yen.