Japanese PM Takaichi Faces Pressure over Economic Policy

Tokyo, Oct. 20 (Jiji Press)--Japanese Prime Minister Sanae Takaichi faces near-term pressure to control debt issuance and secure financial resources to fund key measures after her economic policy has sent the yen weaker and bond yields higher since she took office a year ago.

Market players have been concerned about Takaichi's "responsible and proactive fiscal policy," believing that it means she favors a reflationary policy of aiming to achieve high economic growth through expanded fiscal spending and monetary easing.

The dollar approached 164 yen in late July to hit the highest level in about 39 years, rising sharply from just above 151 yen when Takaichi took office in October last year. The 10-year government bond yield rose to a 30-year high of 3.115 pct in late September, rocketing from just above 1.6 pct.

In July, the wording of a draft of the government's annual economic and fiscal policy guidelines was perceived as a warning against the Bank of Japan's efforts to raise interest rates, which triggered selling of government bonds.

U.S. Treasury Secretary Scott Bessent became increasingly concerned that pressure on Japan's currency and government bonds might trigger selling of U.S. Treasury securities, leading to the first Japan-U.S. joint market intervention to support the yen in 28 years at the end of July.

[Copyright The Jiji Press, Ltd.]