Political Upheaval: Japan Faces Leadership Crisis

Japan's political landscape is in turmoil as junior coalition partner Komeito withdraws support from the Liberal Democratic Party's new leader, Sanae Takaichi. This move jeopardizes Takaichi's bid to become Japan's first female prime minister and prompts speculation about alliances and opposition candidates. The political uncertainty impacts both the yen and market expectations.

Japan's political arena faces uncertainty as Komeito, the junior partner in the ruling coalition, withdraws support from Liberal Democratic Party's new hardline leader, Sanae Takaichi. This unexpected move raises questions over Takaichi's ambition to become Japan's first female prime minister.

Takaichi's leadership was expected to solidify the LDP's stance, but Komeito's departure means the party falls short of a majority in parliament. The LDP's management of a long-standing political funding scandal has further strained alliances, complicating Takaichi's path to leadership, as opposition parties rally for an alternative candidate.

The yen responded to the political developments, strengthening slightly amid lowered expectations for Takaichi's economic policies. The opposition's potential candidate, Yuichiro Tamaki of the Democratic Party for the People, gains traction, suggesting shifting political dynamics as Japan enters what Komeito describes as an 'era of the multi-party system.'

(With inputs from agencies.)