The Japanese yen slid to a nine-month low against the US dollar in Asian trading on Wednesday, heading toward losing the 155-yen level for the first time since February, as the greenback strengthened amid growing expectations that the longest US government shutdown in history is about to end.

The yen also came under additional pressure from mounting speculation that Japan is entering a new phase of fiscal and monetary stimulus to support its weak economy, following recent comments from Prime Minister Sanae Takaichi.

Price Overview

The dollar rose 0.4% against the yen to 154.79 the highest level since February after opening at 154.14 and touching a session low of 154.04.

The yen ended Tuesdays session flat against the dollar, after losing around 0.75% over the previous two days amid pressure from Takaichis pro-stimulus remarks.

US Dollar

The US Dollar Index rose about 0.2% on Wednesday as it recovered from a two-week low, reflecting renewed strength in the greenback against a basket of major and minor currencies.

The rebound came as markets anticipated an official end to the US government shutdown later today, after the Senate approved a bill on Monday night to restore federal funding and reopen government operations.

The agreement now moves to the Republican-controlled House of Representatives, where Speaker Mike Johnson said he plans to bring it to a vote on Wednesday and send it to President Donald Trump for signature.

Sanae Takaichi

Prime Minister Takaichi announced plans to draft a new multi-year fiscal target designed to allow greater flexibility in government spending a shift that could weaken Japans commitment to fiscal discipline.

She also reiterated her call for the Bank of Japan to move cautiously and slow the pace of rate hikes, emphasizing the need to balance economic growth support with price stability.

Analysts believe Takaichis comments may signal the start of a new phase of expansionary fiscal policy to stimulate growth, while simultaneously presenting additional challenges for the Bank of Japan as it seeks to coordinate monetary tightening with a more relaxed fiscal stance.

Interest Rate Outlook

Market pricing for a potential 25-basis-point rate hike by the Bank of Japan in December remains steady around 50%.

Investors are awaiting further data on inflation, unemployment, and wage growth in Japan before reassessing those expectations.