The Japanese yen fell to a two-month low of 150.6 per U.S. dollar on Tuesday amid rising political uncertainty following Sanae Takaichi’s victory in Japan’s ruling LDP leadership race, paving the way for her to become the country’s next prime minister.
Markets are closely watching who will join her cabinet and how her dovish fiscal stance may shape Japan’s future monetary direction.
Takaichi appointed former Prime Minister Taro Aso as LDP vice president and former Finance Minister Shunichi Suzuki as secretary-general. Analysts said her alliance with the Aso faction could limit aggressive easing but overall policy is likely to remain accommodative.
Finance Minister Kenji Kato warned that authorities are monitoring “excessive currency volatility,” but stopped short of signaling intervention. The yen also hit a record low of 176.35 per euro, reflecting weaker global demand for Japanese assets.
In the U.S., the dollar index rose 0.1% to 98.23, supported by expectations of further Federal Reserve rate cuts and ongoing political uncertainty as the U.S. government shutdown entered its seventh day.
The euro fell to $1.1694 after France’s government resignation and the European Central Bank hinted at possible policy easing if inflation weakens further.
Elsewhere, the Australian dollar fell to $0.6608, the New Zealand dollar to $0.5822, and Bitcoin traded at $124,335.
According to CME FedWatch, traders are pricing in a more than 90% chance of a 25-basis-point Fed rate cut in October, with another move likely before year-end.