Yen Set for Biggest Weekly Drop in a Year, Euro Hit by French Political Turmoil

By Mohamed El-Sherif

The Japanese yen steadied on Friday but was heading for its sharpest weekly decline in a year, as expectations of a near-term rate hike by the Bank of Japan faded. Policymakers appear committed to maintaining loose monetary policy to support growth, even at the expense of a weaker currency.

The slump underscores a long-running challenge for Japan: balancing the need to stimulate its economy with the desire to keep the yen attractive to global investors. While a softer yen may help exporters by making Japanese goods more competitive abroad, it also increases the cost of imports, putting added pressure on households and consumers at home.

In Europe, the euro remained pinned near two-month lows as investors reacted to fresh political turbulence in France. The government’s appointment of a sixth prime minister in less than two years has fueled concerns about instability at the top of the executive branch, raising doubts over market confidence in the eurozone’s second-largest economy.

Global markets are closely tracking developments in Tokyo and Paris, where both currencies face pressure from economic and political uncertainty. Together, the yen’s downturn and the euro’s struggles highlight how fragile investor confidence can become when monetary policy challenges intersect with political crises.