Japanese Prime Minister Takaichi Defends Economic Policies Amidst Yen Weakness and Rising Rates

Japanese Prime Minister Sanae Takaichi has firmly rejected criticism linking her administration to the recent weakness of the yen and the concurrent rise in domestic interest rates. Addressing concerns voiced by an opposition lawmaker in parliament, Takaichi stated, "I have been repeatedly criticized for 'Takaichi's weak yen' and 'Takaichi's high interest rates,' but I clearly deny that."

Takaichi asserted that her government's focus on building a robust economy would naturally enhance confidence in the Japanese yen. This comes at a time when the yen has experienced a significant depreciation, reaching levels not seen since 1986, while yields on Japanese government bonds have climbed to multi-decade highs. These developments prompted interventions in the foreign exchange market by both Tokyo and Washington to support the currency.

Responding to questions about the compilation of a second supplementary budget, Takaichi assured that her government would manage the issuance of new government bonds prudently. This statement follows earlier remarks in January where she suggested that a weaker yen could benefit export industries, although she later clarified she had no specific preference for the currency's direction.

The government's economic policies, including a proposed food tax cut and a supplementary budget earlier this year, have raised questions about the potential need for increased bond issuance to fund government spending. While Takaichi has maintained that total bond issuance for 2026 would remain consistent with the original budget plan, some experts have expressed skepticism, arguing that increased spending typically necessitates increased debt.