Takaichi Defends Yen Policy as Approval Ratings Slump

Japanese Prime Minister Sanae Takaichi defended her government's policies in a parliamentary session on July 27, stating that they would underpin market trust in the yen. The yen has been experiencing a significant decline, hitting a 40-year low, and Takaichi acknowledged this but attributed it to various factors and market movements.

Takaichi emphasized that her administration's efforts to boost Japan's growth potential and competitiveness would ultimately lead to increased market trust in the yen. However, she faced criticism from opposition lawmakers who suggested that the government's reservations over the Bank of Japan's rate-hike plans could have contributed to the yen's slump.

The Prime Minister's approval ratings have taken a hit due to rising living costs and her administration's expansionary fiscal and monetary policies, which have led to increased bond yields and a decline in the yen. The ruling party has struggled to reach an agreement on cutting the 8% levy on food sales, a move that Takaichi had pledged to cushion the blow from rising living costs.

The government's financial situation is also under scrutiny, with analysts pointing out that the proposed tax suspension and increased defence spending would add strains to Japan's already fragile finances. The approval rating for Takaichi's administration fell to 57% in a recent poll, down from 69% in June, while those who disapproved of her administration rose to 34%.