Political turbulence could weigh on the yen's value in the months ahead.

The financial sector was stunned by news that the incumbent mayor of Yokohama, supported by the ruling coalition as well as opposition parties, was beaten by an independent reform-minded challenger in Sunday's election.

Apparently disillusioned by recent political scandals, the electorate delivered a stern no-confidence vote to domestic politics. The news also came at a time when market participants were bracing for investment activity in fiscal 2002, which began Monday.