The Japanese yen recorded declines of more than 100 points against the US dollar after the Japanese parliament elected former Economic Security Minister Sanae Takaichi as Japan’s first female prime minister. She won 237 votes out of the 465 seats in the lower house of parliament. This comes after weeks of political controversy in Japan after the partner Komeito party withdrew its support for Sanae, causing the collapse of the 26-year-old coalition. Sanae moved to form a coalition with the Japan Innovation Party or the opposition Ishin Party.
Prime Minister Sanae is known for her support for the economic stimulus policy (Abenomics) launched by the late Prime Minister Shinzo Abe, which supports increased spending and tax cuts. She opposes raising interest rates, which supported Japanese stocks, which reached record highs following her victory, while the Japanese yen declined. The Bank of Japan’s path is now more complicated than ever, as it finds itself caught between its current view of tightening monetary policy and expectations of fiscal stimulus and monetary easing, which is expected to be the approach of the Prime Minister, thus creating more tension and uncertainty for investors.
The Japanese yen is trading at 152.03 against the US dollar, losing more than 135 points, and is trading at 203.30 against the British pound, declining by more than 140 points.