The Japanese yen fell in Asian trading on Tuesday against a basket of major and minor currencies, extending its losses for the third consecutive day against the US dollar, ahead of the parliamentary vote to elect a new prime minister in the world's fourth-largest economy.

Sanae Takaichi, leader of the ruling Liberal Democratic Party, is steadily moving closer to becoming Japan's prime minister, becoming the country's first female leader, after receiving crucial political support that boosts her chances of winning the position.

Price overview

Japanese yen exchange rate today: The dollar rose 0.3% against the yen to 151.15 yen, from the opening price of 150.74 yen, and recorded a low of 150.47 yen.

The yen ended Monday's trading down 0.1% against the dollar, marking its second consecutive daily loss, as corrections and profit-taking continued from its nearly two-week high of 149.37 yen.

Political developments

Kyodo News reported that the ruling Liberal Democratic Party and the Japan Innovation Party announced the formation of a formal alliance, a strategic move aimed at securing a parliamentary majority ahead of the crucial vote to choose the new prime minister later today.

Sanae Takaichi, who is seeking to become Japan's first female prime minister, faced significant political danger after suddenly splitting from Komeito, her traditional coalition partner for more than 26 years, earlier this month.

The new alliance with the Japan Innovation Party, known for its hard-right leanings, appears to give Takaichi a strong push toward power, given the two parties' shared visions on economic and defense issues, including support for an accommodative monetary policy and increased military spending to bolster the country's defense capabilities.

According to reports from Japan's FNN network, Takaichi plans to appoint former regional revitalization minister Satsuki Katayama as finance minister in her upcoming cabinet.

Opinions and analyses

Ray Attrill, head of foreign exchange research at National Australia Bank, said that if Takaichi is confirmed as prime minister today, the next question will be what policies she will pursue, particularly regarding monetary policy and fiscal policy, and whether the Ishin Party has set specific conditions for a coalition with the LDP.

Attrill added that these important political developments in Japan could open the door to significant volatility in the yen's movement.