Japanese Yen Falls as PM Says He Will Step Down

The Japanese yen fell against the euro and the U.S. dollar on Thursday, after its PM Naoto Kan said he will

as soon as the effects of the earthquake and tsunami are contained. It seems Japan's PM decided to surrender his position before the vote on no-confidence motion in the parliament. The main opposition parties, as well as the Japanese public, see Mr. Kan's performance in the aftermath of the earthquake as inadequate. The yen fell against both the U.S. dollar and the euro. The euro is trading around ¥116.41, or 0.365% above yesterday's close. The dollar gained much less, however, rising only 0.06% to ¥80.99. The Japanese currency failed to find support in better than expected capital spending data. The

rose by 3.3% in Q1, down from a 3.8% rise in Q4 2010. Most analysts were expecting the Q1 figure to be 3%, however. Traders are probably worried that political instability will not help resolve Japan's long term growth problems. It is likely that the Japanese economy will rebound strongly in the short run, after the government reconstruction program kicks in. The economy's long term prospects remain less bright, however. Japan has been fighting deflation and low growth for two decades now, and the political instability will not bring a solution to Japan's long term problems. Traders who believe Japan's political insecurities and long term growth woes will continue to eat into the value of the yen will be interested in the ProShares UltraShort Yen ETF

. Those traders who believe the Japanese economy will benefit from the reconstruction program even in the long run will be interested in the JPY/USD Exchange Rate ETN

.