Japan’s ruling coalition led by the Liberal Democratic party has lost its parliamentary majority after suffering an unexpected rebuke by voters that plunged the country into political uncertainty.

The LDP’s worst electoral result in 15 years will leave the party struggling to govern and recently anointed Prime Minister Shigeru Ishiba under pressure to resign. The yen fell almost 1 per cent against the dollar on Monday on speculation that political paralysis would delay further interest rate rises in Japan.

The loss of the coalition’s previously comfortable majority was a much more damaging outcome than most analysts had forecast and reflects surging discontent in Japan after years of stagnant wage growth and recent sharp increases in the cost of living.