Markets React as Yen Carry Trade Returns Following Takaichi Remarks

On October 6, 2025, Japan’s financial markets experienced significant turbulence following the unexpected election of Sanae Takaichi as the leader of the ruling Liberal Democratic Party (LDP). Her victory, widely interpreted as a shift towards more aggressive fiscal policies reminiscent of former Prime Minister Shinzo Abe’s “Abenomics,” has reignited the yen carry trade, a strategy where investors borrow yen at low interest rates to invest in higher-yielding assets abroad.