Facing questions in parliament, Sanae Takaichi pushed back on critiques tying her to a cheaper yen and rising borrowing costs. "I have been repeatedly criticized for 'Takaichi's weak yen' and 'Takaichi's high interest rates,' but I clearly deny that," she said in response to opposition lawmaker Yoshifumi Hamano, who asked about compiling a second supplementary budget. She added that her administration aims to boost trust in the yen by fostering a strong economy.
During her tenure, Japanese government bond yields have climbed to multi decade highs while the currency slid to its weakest level since 1986, leading authorities in Tokyo and even Washington to intervene to support the yen. Snapshot: USD/JPY printed 158.55, up 0.07 (+0.04%) at 8:58 PM EDT. The Japan 10 year yield stood at 2.931%, up 0.024, at 9:58 AM JST.
Bond yields have been climbing as Japan's central bank lifts its policy rate and presses on with normalizing monetary policy. Japan's exports have also been partly lifted by the yen's depreciation, which makes shipments more competitive.
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On debt management, Takaichi said, "We intend to appropriately control the amount of government bond issuance." Earlier this year she rolled out plans to reduce the country's food tax and presented a supplementary budget, increasing the chance that Japan would have to sell additional bonds to keep funding in place.
A historically weak yen alongside rising JGB yields puts Japan squarely back on macro radar for currency and rate exposure. Exporters have benefited from depreciation, even as Takaichi signals restraint on new bond supply and no stated preference for yen direction. The bottom line: track the yen level and the 10 year yield together - they are the two dials shaping Japan's policy space and your Japan linked returns.
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