Japan’s Takaichi rejects blame for weak yen and rising bond yields

Japanese Prime Minister Sanae Takaichi rejected criticism in parliament on October 19 that her policies were responsible for the weak yen and rising interest rates, according to a Reuters translation of her remarks reported by CNBC. The exchange puts her government’s plans for borrowing and spending under scrutiny as Japanese government bond yields rise.

Opposition lawmaker Yoshifumi Hamano had asked about compiling a second supplementary budget. Takaichi responded that she had repeatedly faced criticism over what she called ‘Takaichi’s weak yen’ and ‘Takaichi’s high interest rates,’ adding: ‘I clearly deny that.’ Her denial states her position; it does not establish what caused either market move.

Takaichi’s answer on yen confidence and borrowing

The borrowing question matters because Takaichi has announced a plan to cut the food tax and has unveiled a supplementary budget. CNBC reported that the measures raised the possibility of more bond issuance to sustain government spending. CNBC also cited Bloomberg as reporting that Takaichi said total bond issuance for calendar year 2026 would remain unchanged from the original budget plan, a position experts viewed skeptically.

Jesper Koll, expert director at Monex Group, challenged the spending arithmetic when the supplementary budget was announced in April. ‘You cannot increase spending without increasing debt,’ he told CNBC. His comment addresses the financing question rather than the cause of movements in the yen or bond yields.

Why the yen and bond market are in focus

CNBC reported that the yen had weakened to its lowest level since 1986 while Japanese government bond yields had reached multidecade highs. It said Tokyo and Washington had intervened in the foreign exchange market to support the currency. A weaker yen can make Japanese exports more competitive, while its effect on confidence is central to the criticism Takaichi addressed.

The Bank of Japan has been raising its policy rate and continuing to normalize monetary policy as bond yields rise, CNBC reported. That wider shift is part of the setting for the debate over government borrowing; Takaichi’s parliamentary answer offered a commitment to manage issuance, rather than a new bond issuance total.

Japan’s House of Councillors records that Takaichi was designated prime minister on October 21, 2025. Her October 19 response came as the opposition pressed her government on its next budget decision, with the scale of any additional borrowing still at issue.