Asian currencies traded mostly flat on Tuesday as investors remained cautious amid the prolonged U.S. government shutdown, while Japan’s yen weakened sharply following the election of fiscal dove Sanae Takaichi as the new leader of the ruling Liberal Democratic Party (LDP).
The U.S. Dollar Index edged up 0.1%, extending modest gains from Monday, with Dollar Index Futures steady around 04:30 GMT.
The Japanese yen hit a two-month low, with the USD/JPY pair climbing to 150.62 after surging nearly 2% on Monday. Takaichi’s weekend victory paves the way for her to become Japan’s next prime minister, reinforcing expectations of continued ultra-loose monetary policy. Known for her support of aggressive fiscal spending, Takaichi has criticized the Bank of Japan’s rate hikes as “stupid,” signaling a likely continuation of accommodative policy under her leadership.
Analysts at ING noted that the yen’s sharp decline reflected market surprise at Takaichi’s win but warned that sustained weakness could raise Japan’s import costs and strain relations with Washington. They expect any move above the 150 level to be temporary rather than the start of a lasting rally.
Across Asia, trading was subdued as investors awaited the release of the Federal Reserve’s September meeting minutes. With the U.S. government shutdown extending into its second week, the delay of key economic data weighed on market sentiment. The Singapore dollar and Australian dollar inched lower, while the South Korean won and Chinese yuan traded largely unchanged.
The Indian rupee hovered near record lows, with the USD/INR pair up 0.1%. Analysts cautioned that limited data releases this week would keep markets focused on broader macroeconomic developments.


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