Japanese Yen Experiences Difficult Week
The Japanese yen had a tough week, marked by a depreciation of around 3.5% against the US dollar, its largest weekly decline since September 2024. This downturn comes as markets anticipate the appointment of Sanae Takaichi as the head of the Japanese government, fueling expectations of an even more accommodative economic and monetary policy.
Market Reaction
On Friday, the Japanese currency attempted to rebound in the Asian market after hitting its lowest level in eight months. The dollar fell by 0.25% to 152.64 yen, compared to 153.04 yen at the opening, but this slight bounce was not enough to erase the losses accumulated during the week.
Impact of Sanae Takaichi's Potential Appointment
The prospect of Sanae Takaichi, the new president of the Liberal Democratic Party, becoming the first female head of government in Japanese history, is putting pressure on the yen. Investors expect her government to prioritize fiscal stimulus and maintain the Bank of Japan's ultra-accommodative monetary policy. This expectation is driving the yen's decline, as investors anticipate a more expansionary economic policy under Takaichi's leadership.
