Takaichi denies driving the yen and rates
Prime Minister Sanae Takaichi used a parliamentary session to reject the charge that her administration is simultaneously responsible for a soft yen and for pushing borrowing costs higher. Answering a lawmaker from an opposition party who had raised the drafting of a second supplementary budget, she said she firmly disputed the characterizations attached to her name. She added that her government's route to restoring trust in the currency runs through constructing a robust economy.[S1][S2][S3][S4]
The pushback follows a period in which Japanese government bond yields climbed to levels not seen for decades, while the yen slid to its weakest point since 1986. The scale of the moves drew action from authorities in Tokyo and also from Washington, both of which intervened in foreign exchange markets to prop up the currency.[S1]
Exports, tariffs and a currency buffer
Earlier in the year, Takaichi was reported to have described a cheap yen as helpful to exporters and as a cushion against U.S. tariffs, before clarifying soon afterward that she did not favor any particular direction for the currency. A softer yen does make Japanese goods more competitive abroad, and it has contributed to export gains.[S1]
Bond issuance and the food tax pledge
On the debt side, Takaichi told lawmakers that her government plans to manage the volume of government bonds it issues in a suitable manner. The remark comes as yields rise amid the Bank of Japan's policy rate increases and its continuing normalization of monetary policy.[S1]
Her administration had already announced a plan to reduce the country's food tax and presented a supplementary budget earlier in the year, steps that raised the prospect of additional bond sales to fund state spending. Takaichi has said total bond issuance for calendar 2026 would stay at the level set in the original budget plan, according to Bloomberg, though specialists voiced doubt. Jesper Koll, an expert director at Monex Group, told CNBC in April when the supplementary budget was unveiled that bond markets may be many things but they are not foolish, and that spending cannot rise without debt rising too.[S1][S5]
