FX.co ★ Yen Set for Sharp Weekly Gain

The Japanese yen briefly weakened beyond 153 per dollar on Friday but remained on course for its largest weekly gain since November 2024, underpinned by expectations that Prime Minister Sanae Takaichi’s fiscal expansion plans will bolster growth without overburdening public finances. Takaichi’s decisive general election victory reduced political uncertainty and delivered a clear mandate for higher spending and targeted tax cuts.

Seeking to ease market concerns over the proposed two-year sales tax reduction on food, the Prime Minister stressed that the measure would not be financed through additional government bond issuance. Instead, her administration intends to rely on subsidies, special tax provisions, and non-tax revenues to roll out its initiatives in what she described as a “sustainable” manner. The yen also found support from verbal intervention, with top currency diplomat Atsushi Mimura reiterating that authorities remain on high alert over foreign exchange moves despite the currency’s recent rebound.