FX.co ★ Yen Weakens After Takaichi’s Leadership Win

On Monday, the Japanese yen declined by over 1%, surpassing the 149 mark per dollar, a level not seen in a week. This depreciation followed a vote by the ruling party, paving the way for Sanae Takaichi, a fiscal dove and pro-stimulus lawmaker, to potentially become Japan’s next Prime Minister. Among the five candidates vying in the Liberal Democratic Party race to succeed the hawkish Prime Minister Shigeru Ishiba, Takaichi was considered the most expansionary, aligning closely with the late Shinzo Abe's "Abenomics" economic strategies. Upon her victory, Takaichi emphasized the necessity for the government and central bank to coordinate effectively to achieve inflation propelled by demand, underpinned by increased wages and corporate earnings. Concurrently, Bank of Japan Governor Kazuo Ueda reiterated on Friday that interest rate hikes would resume if economic growth and inflation align with projected forecasts.