Prime Minister Sanae Takaichi’s team is pairing a large stimulus with selective tax cuts while seeking to defend a weakening yen. News reports put the first bundle above ¥13.9 trillion (about $92 billion) and cite short-lived measures like scrapping the extra gasoline duty, a mix that stirred global markets as Japanese assets and the currency jumped. The tension between boosting domestic spending and stopping the yen from sliding is moving investors, crypto treasuries and derivatives desks.
Takaichi’s recipe blends big public outlays with a familiar loose-money flavor. The cabinet readies about ¥13.9 trillion of stimulus and steps such as removing the 25.1 yen-per-litre gasoline surcharge alongside cash-back credits for low earners, according to Modern Diplomacy and other outlets.
Markets moved at once — the yen dropped, Tokyo shares climbed, and yen-priced Bitcoin and tokenized assets hit fresh highs, AP and market wires note. Lower taxes and cheap loans widen the rate gap with places like the U.S., lure money away from Japan, and push the yen lower.
Fiscal strain is in focus as editorials warn that extra outlays could hurt state finances and shake trust in government bonds. On top of that, a defense build-up set at roughly 2% of GDP and a five-year purse near ¥43 trillion, as reported, add a fixed load to the deficit.
Implications for FX, debt and derivatives
Talk of stimulus lifts risk hunger at home, with perpetual futures and options showing higher open interest and choppy funding costs, early press data show. Japan’s low rates against loftier U.S. yields keep the yen under downward pressure, and some forecasts sketch a ¥160-per-dollar level for 2025.
Larger outlays next to lighter taxes feed worries about whether Tokyo can service its bonds, and those doubts may curb demand for JGBs, editorials caution. The Bank of Japan might step in, but such action tends to give only brief help; the bank has left its policy rate untouched and said it will trim JGB purchases more slowly, per official releases and media.
The next test is the rollout of the ¥13.9 trillion package and the Bank of Japan’s response. Together they will set the yen’s near-term path and shape the risk tone in derivatives as well as tokenized markets.
