Yen exchange rate today
According to Lao Dong, on October 6, the Japanese Yen (JPY) continued to depreciate against the US Dollar (USD) and hit its lowest level since early August, when investors reacted to the news that Ms. Sanae Takaichi - who supports public spending and loose monetary policy - won the election for the leadership of the Liberal Democratic Party (LDP).
With this victory, Ms. Takaichi is expected to become Japan's first female Prime Minister in mid-October. The rise of a puppet has made the market believe that the Bank of Japan (BoJ) will find it difficult to raise interest rates in the near term, in order to support government spending plans. This expectation has caused investors to sell the Yen - which is considered a safe haven asset - in the context of increasing risk-off sentiment in the global market.
At the same time, the sharp decline of the Yen has helped the USD increase in value, pulling the USD/JPY pair above 150.00 - an important psychological level for currency traders. However, the US dollar's gains may be limited as the US Federal Reserve (Fed) is likely to cut interest rates twice more this year, along with concerns about the economic impact of the US government's shutdown.
Nikkei 225 sets new peak, Yen still under pressure
According to FXStreet, Japan's Nikkei 225 index has risen to a new record high thanks to expectations that the new government will boost growth through expanded fiscal policy. However, the Yen is still under heavy pressure because the prospect of the BoJ not changing monetary policy soon.
Previously, BoJ Governor Kazuo Ueda said the central bank will only raise interest rates when the economy and inflation develop as expected. The market is still betting that the BoJ may raise interest rates in early 2026, which could help the Yen avoid falling further in the near future.
Meanwhile, due to the impact of the US government's temporary shutdown, many important economic reports have been postponed, causing the USD to depend on the statements of Fed officials. Investors are now waiting for more signals from Japan's Household Spending data due out on Tuesday, to better assess the prospects of the economy and the next direction of the Yen.
