Japanese Prime Minister Sanae Takaichi stated that boosting the country's economic competitiveness is vital for maintaining confidence in the yen. In a recorded interview aired by Nippon Television, Takaichi emphasized that her administration’s economic policies are not intended to manipulate exchange rates.

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During a meeting with U.S. President Donald Trump last month, Takaichi expressed concerns about the yen's undervaluation. She noted, "Our economic policy is not aimed at manipulating exchange rates." Takaichi aims to enhance Japan’s growth potential through significant investments in both crisis management and emerging growth areas, which she believes will strengthen Japan’s global competitiveness and market trust in the yen.

U.S. Treasury Secretary Scott Bessent endorsed Japan's economic strategy during talks with Finance Minister Satsuki Katayama on August 31, without making specific demands. Takaichi reiterated her commitment to pursuing a strong economy alongside a sustainable fiscal policy.

Despite recent interest rate hikes by the Bank of Japan, the yen has remained weak, leading to increased import costs and inflation concerns. Takaichi's proposed spending plans, which total 143 trillion yen ($903 billion) for next fiscal year, are seen as a contributing factor to the yen's depreciation and rising bond yields, amid worries about Japan's financial situation.

The budget requests include several expenditures that lack specified amounts, particularly for defense. Takaichi acknowledged the government's need to clarify funding plans for a proposed temporary suspension of food levies and anticipated increases in defense spending, which have unsettled bond markets.

She assured that the budget requests would not automatically dictate the next fiscal year’s budget, promising careful evaluation of necessary and effective policies. Takaichi stated, "We will set clear priorities," as part of a broader effort to reform the budget process. The administration intends to align spending with its target of gradually reducing Japan's debt-to-GDP ratio while managing bond issuance responsibly.

Lastly, Takaichi did not reiterate her previous comments from a newspaper interview regarding capping new bond issuance at 40 trillion yen for next year's budget.