Hedge funds increased bearish yen bets more aggressively last week than at any time since 2015. The surge in short positions coincided with growing speculation Japan will call a snap election, potentially reshaping fiscal and monetary policy.

Investors are betting Prime Minister Fumio Kishida's Liberal Democratic Party may struggle in upcoming polls. Recent scandals and weak approval ratings have fueled doubts about the ruling party's ability to maintain control, creating uncertainty around Japan's aggressive stimulus framework.

Market participants now watch for any shift in Bank of Japan policy if a new government emerges. A change in leadership could prompt adjustments to yield curve control measures, potentially weakening the yen further. Traders remain focused on electoral timing and fiscal policy signals.

Strategists suggest the yen weakness reflects broader concerns about Japan's debt sustainability. With the world's largest public debt burden, any rollback of monetary accommodation could trigger volatile movements in Japanese assets and currencies.