The dollar was modestly firmer above ¥112 in late Tokyo trading on Monday, with Japanese Prime Minister Shinzo Abe set to call a general election at an evening news conference.
Mr Abe, in power for five years, said he needed a mandate to shift some revenues from a planned future tax hike to social spending such as education, besides seeking support for a tough stance toward North Korea's repeated missile and nuclear tests.
"I will dissolve the lower house on September 28", Premier Abe declared at a press conference. The prime minister did not give a date for the vote but it is widely expected to be October 22.
The prime minister had been expected to face a grilling over the cronyism scandals during a session of parliament from Thursday and opposition party officials saw the move as a ploy to avoid hard questions.
The prime minister said the snap election was called in an attempt "to deal with the biggest challenge facing Japan, which is the population aging and low birthrate".
The prime minister of Japan is going to take an advantage of opposition disarray through the snap election.
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Mr Abe's support has surged as rising tensions with North Korea have overshadowed criticism of alleged cronyism.
Abe will seek backing for a ¥2-trillion ($18-billion) economic package, the Yomiuri newspaper reported on Monday, without attribution.
As Mr Abe addressed reporters, more than 100 protesters gathered outside the Prime Minister's Office to demand his resignation. Also, opposition parties are regrouping and unprepared for an election.
Support ratings for his government plunged to below 30 percent in July following repeated parliamentary questions about allegations that Abe helped his friend obtain approval for a veterinary college.
The LDP and its junior coalition partner Komeito control 323 seats, or more than two-thirds, in the Lower House.
According to a weekend poll in business daily Nikkei, 44 percent of Japanese plan to vote for Abe's conservative Liberal Democratic Party (LDP), while only eight percent favoured the main opposition Democratic Party. Reforms enacted past year will reduce the number of lower house seats to 465 from 475.