Since Sanae Takaichi won the Liberal Democratic Party presidential election on October 4, 2025, the yen has generally weakened against G10 currencies. However, Japan's balance of payments records show a record net purchase of the yen, including approximately 27 trillion yen (about US$170 billion) in intervention buying. Japan's current account surplus is projected to reach 35.4 trillion yen in 2026, up from the record 31.5 trillion yen in 2025; net outflows from direct investment and portfolio investment are projected to decrease to an annualized rate of 4.4 trillion yen, less than half of last year's figure. JPMorgan Chase believes that the continued depreciation of the yen cannot be explained by normal cross-border capital flows, and there may be "off-balance-sheet yen selling" that is not captured by balance of payments statistics, reflecting investors' concerns about the Takaichi municipal government's expansionary fiscal policy and the risks to the Japanese economy. The report also points out that the USD/JPY exchange rate is significantly higher than the reasonable level implied by the USD/JPY interest rate differential.
