Asian Currencies Mixed as U.S. Government Shutdown Continues; Yen Weakens After Takaichi’s LDP Win
Most Asian currencies traded subdued on Monday as investors remained cautious during the ongoing U.S. government shutdown. The Japanese yen slumped sharply after Sanae Takaichi won the ruling Liberal Democratic Party (LDP) leadership election, a result seen as favoring Japan’s loose monetary policy stance.
The U.S. Dollar Index, which tracks the greenback against a basket of major currencies, rose 0.3% during Asian trading. Dollar Index Futures were also up 0.4% as of 04:01 GMT, reflecting continued demand for safe-haven assets amid global uncertainty.
Japanese Yen Falls on Dovish Policy Expectations
Takaichi, a conservative lawmaker and long-time supporter of expansionary “Abenomics” policies, secured 54.25% of votes in Saturday’s LDP runoff. She is expected to be confirmed as Japan’s first female prime minister in mid-October, with little resistance from opposition parties.
Her victory signals further government spending and reduces the likelihood of immediate tightening by the Bank of Japan (BOJ). The USD/JPY pair surged 1.7% to around 150 yen, marking its highest level in over a month.
Japanese government bonds also weakened, with long-term yields rising as investors priced in expectations of more fiscal stimulus and increased debt issuance.
Asia FX Trades Cautiously as Markets Observe Shutdown and Holidays
Across Asia, foreign exchange markets were quiet due to public holidays in major economies such as China, South Korea, and Taiwan. Traders also continued to monitor the fallout from the U.S. congressional stalemate, which has delayed crucial economic data releases including nonfarm payrolls and inflation reports.
Investors are now turning their attention to Federal Reserve Chair Jerome Powell’s upcoming speech on Thursday for insights into future interest rate decisions.
Among regional currencies, the Singapore dollar (USD/SGD) rose 0.3%, the South Korean won (USD/KRW) gained 0.2%, and the Indian rupee (USD/INR) edged 0.1% higher. The Chinese yuan (USD/CNH) and Australian dollar (AUD/USD) both held largely steady in light trading.
