18 Dec 2012

Shares up, yen down after LDP win

8:35 am on 18 December 2012

Japanese shares rose and the yen dipped after the Liberal Democratic Party won the general election there on Sunday.

The Nikkei 225 index rose 1% and the Japanese currency fell to a 20-month low of 84.48 yen against the US dollar.

LDP leader Shinzo Abe has said he will implement measures to help revive the world's third-largest economy, which has been battling years of sluggish growth.

He has also promised to take steps to weaken the yen and fight deflation.

Japan's currency rose almost 6% against the US dollar between April 2011 - November 2012, despite efforts by policymakers to try to weaken it.

The BBC reports Japan has also been fighting deflation or falling prices for many years, which has affected domestic demand.

Before the elections, Mr Abe said that he would implement measures directed at weakening the yen and fighting deflation.

He said that he would set an inflation target as high as 3% and even suggested that the Bank of Japan should print "unlimited yen" to help counter falling prices.