Japan’s yen slid to a two-month low against the U.S. dollar, as financial markets responded nervously to the recent leadership victory of Sanae Takaichi in the ruling Liberal Democratic Party. The drop reflects investor trepidation about Takaichi’s dovish fiscal stance and doubts about how her administration will affect monetary and economic policy.
At one point, the currency weakened past ¥150 per dollar, and hit a record low versus the euro, before rebounding slightly. In response, Japan’s Finance Minister Katsunobu Kato urged restraint, warning officials would monitor for excessive and disorderly movements in foreign exchange markets.
Analysts say the yen is under pressure because markets now expect greater fiscal stimulus, looser monetary policy, and delayed rate hikes under Takaichi’s leadership. With the Bank of Japan already cautious on tightening, the new political uncertainty could deepen volatility in currency and bond markets.
Markets are watching closely how Takaichi assembles her cabinet. Key appointments—like former Prime Minister Taro Aso as vice president of the LDP and former Finance Minister Shunichi Suzuki as party secretary-general—signal alignment with traditional fiscal priorities. As decisions unfold, the yen’s trajectory will be a key barometer for confidence in Japan’s economic direction.
