The New Zealand dollar is heading towards a 1.7 per cent weekly gain against the yen after polling showed Japanese voters are backing a change of government that may take a more activist role in weakening the currency, while figures point to a weakening economy.
The kiwi traded at 67.10 yen at 5pm in Wellington from 67.21 yen, having touched a seven-month high. The yen is poised to weaken by 1.2 per cent this week, recently trading at 82.19 yen per US dollar.
Former Japanese Prime Minister Shinzo Abe's Liberal Democratic Party will win next month's election, according to a November 15 Jiji Press opinion poll, which showed support for leader Yoshihiko Noda plunged after he doubled sales tax in a bid to revive the flagging economy.
Mr Abe has backed more monetary easing and has said he may review legislation ensuring the independence of the Bank of Japan.
The election battle comes as official figures showed Japan's trade deficit was wider than anticipated.
"It's possible we'll get a new government and Bank of Japan leader, but whether they do anything different, we'll have to wait and see," said Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney.
"The yen came an awful long way" this week and may continue to depreciate.
Trading in Japan is closed for a public holiday, and investors will be looking at inflation and industrial production figures from the world's third-biggest economy next week.
The kiwi is heading for a 0.5 per cent weekly gain against the greenback, trading at 81.63 US cents at 5pm in Wellington from 81.55 cents. Trading in the US is expected to be thin after Thursday's Thanksgiving Holiday.
The trade-weighted index was little changed at 73.27 from 73.30, and is heading for a 0.2 per cent increase on the week.
The kiwi edged up to 51.16 British pence from 51.09 pence, and was little changed at 78.51 Australian cents from 78.48 cents.