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A strong showing by the opposition in Japan's lower house election could set the yen strengthening.
Forex

Investors take cover as Japan's election puts easing in question

Warning signs for ruling bloc could spur strengthening of yen

| Japan

TOKYO -- Investors are hedging against upheaval in the foreign exchange and stock markets as campaigning for the Japanese lower house election begins, reckoning that a strong showing by the opposition could send the twin trends of a depreciating yen and climbing stocks into reverse.

Trading in currency options to guard against yen appreciation has surged since Tokyo Gov. Yuriko Koike launched her Kibo no To, or Party of Hope, in late September. Open interest in these contracts reached a roughly four-and-a-half-month high early this month and continued to rise through Tuesday, the official start of the campaign season culminating with the Oct. 22 vote.

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