The Japanese yen weakened on Monday after Prime Minister Sanae Takaichi said a softer currency could be an opportunity for export-driven industries, dampening market speculation that her government may soon intervene to support the currency. Her remarks prompted traders to reassess expectations of near-term official action in the foreign exchange market.

The yen slid as much as 0.5 percent to around 155.51 per US dollar, reversing roughly half of last week’s gains. Those gains had been fuelled by speculation that Japanese and US authorities could coordinate to curb the yen’s sharp depreciation after it approached levels that previously triggered intervention in 2024.

Speaking at an election rally over the weekend, Takaichi said a weak yen could help export-oriented sectors and cushion Japan’s automobile industry against US tariffs. She later clarified that her comments were intended to underline the importance of building an economy resilient to currency fluctuations, rather than signalling tolerance for unchecked currency weakness.

Also Read: 4.6 Magnitude Tremor Hits Andaman and Nicobar's Nicobar Islands at Shallow Depth

Market analysts said the remarks suggested the administration is not currently alarmed by the yen’s level. Felix Ryan, a currency strategist at ANZ Group Holdings, said the comments implied that a weaker yen has advantages for parts of the Japanese economy, reducing the likelihood of immediate intervention. He added that even with potential dollar weakness, the dollar-yen rate is unlikely to fall below 150 in 2026.

Investors are also preparing for heightened volatility ahead of the February 8 snap lower house election. Takaichi is seeking to strengthen the ruling Liberal Democratic Party’s mandate amid high approval ratings, while markets remain alert to the possibility of expansionary fiscal policies that could stoke inflation and pressure both the yen and Japanese government bonds.

Speculation of coordinated intervention has eased further after US Treasury Secretary Scott Bessent said Washington was not intervening to strengthen the yen. Data from Japan’s Finance Ministry also showed no direct currency intervention in recent weeks. Adding to uncertainty is US President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair, a move traders believe could support the dollar and weigh further on the yen.

Also Read: PM Modi Pays Tributes at Dera Sachkhand Ballan on Guru Ravidas Jayanti