Mayor Takashi Higashi's expansionary fiscal policy intensifies worries about the depreciation of the yen, and the dollar to yen exchange rate is back above 153.

On Friday, the Japanese yen continued to weaken, performing the weakest among the Group of Ten (G10) currencies. Earlier, Japan's newly appointed Prime Minister Sanae Takaichi stated in parliament that she will implement a "strategic and responsible" expansionary fiscal policy. As a result, as of the time of writing, the USD/JPY exchange rate has reached 153. The yen has depreciated by about 1.5% this week, more than twice the depreciation of other G10 currencies. Sanae Takaichi has long been seen as a supporter of "Abenomics." This has raised expectations in the market that she may introduce "Abenomics 2.0" to revitalize the still sluggish economic growth. "Abenomics," implemented by former Prime Minister Shinzo Abe, combines massive fiscal spending with bold monetary easing to help Japan escape prolonged deflation. According to sources in the Japanese government, Takaichi is expected to unveil a spending plan that exceeds the 13.9 trillion yen plan set by former Prime Minister Yoshihide Suga last year. In addition, Takaichi has previously called the idea of the Bank of Japan raising interest rates "foolish," although she has only recently stated that she hopes the central bank will pursue "moderate inflation supported by wage growth." A recent survey shows that due to Takaichi's previous stance in favor of monetary easing, 90% of Bank of Japan watchers expect that the central bank will not raise interest rates when it announces its next policy decision on October 30. In her first policy speech to parliament as prime minister, Takaichi promised to prioritize tackling cost-of-living pressures and strengthening national defense. She also pledged to achieve the goal of Japan's defense spending accounting for 2% of GDP ahead of schedule. While Takaichi's preference for fiscal stimulus policies has driven the Japanese stock market to new highs, it has also put pressure on the yen and Japanese government bonds. However, Japanese long-term government bonds rose slightly on Friday, as Takaichi did not mention a significant increase in bond issuance. The new finance minister, Satsuki Katayama, previously hinted that if existing resources are insufficient, it may be necessary to issue additional bonds to fund Takaichi's upcoming economic plan. In an interview on Friday, Satsuki Katayama said, "We typically draw additional budget from higher-than-expected tax revenue and funds that have not been used in previous budgets. But if that is not enough, we will have to issue more government bonds. If it comes to that, we have no choice." Mark Cranfield, strategist at Markets Live, said, "Takaichi wants to increase government revenue without raising taxes. Forex traders consider this goal overly optimistic, hence the weakening of the yen." "If the US CPI data, which will be released later today, is higher than expected, the USD/JPY exchange rate may rise to levels not seen since February." In addition to fiscal policy, investors are also paying attention to the monetary policy outlook for the US and Japan, as both central banks will discuss interest rates next week. Investors will closely watch the US CPI data for September released tonight to assess the possible actions of the Federal Reserve next week, as well as the direction of the USD/JPY exchange rate. Meanwhile, the market is also awaiting the Bank of Japan's policy meeting next Thursday, especially the remarks from Governor Haruhiko Kuroda during the post-decision press conference to gain clues about the timing of the next possible rate hike.