Japanese prime minister yukio hatoyama said on Wednesday he and his powerful party No. 2 would resign after a slide in the polls threatened their party’s chances in an election expected next month.

The yen sank to a two-week low against the dollar after Hatoyama became the fourth Japanese leader to leave office in a year or less, with some investors worried that political instability would make Japan’s weak economy more dependent on the Bank of Japan’s easy monetary policy.

Calls built up in Hatoyama’s democratic party of japan (DPJ) for him to step down to revive the party’s fortunes ahead of an election for the upper house of parliament expected on July 11 that it must win to smooth policymaking.

With tears in his eyes, Hatoyama told party lawmakers that he and party secretary-general Ichiro ozawa would resign.

“In order to revitalize our party, we need to bring back a thoroughly clean Democratic Party. I would like to ask your cooperation,” Hatoyama said.

Hatoyama’s ratings slid on voter doubts about his leadership, while the old-style image of ozawa, seen as pulling strings behind the scene, had also eroded public support.

Analysts have tipped outspoken Finance Minister Naoto kan as the frontrunner to replace Hatoyama, who quits after just eight months on the job. A new leader will be chosen on Friday, in a few days, a party official said.

The latest political turmoil, including the departure of a tiny leftist party from the ruling coalition, has distracted the government as it thrashes out a plan to cut huge public debt and a strategy to engineer growth despite a fast-aging population.

“Hatoyama’s resignation may cause delays in the scheduled releases this month of the government’s growth strategies and fiscal discipline targets. Whoever replaces Hatoyama would need to work them out before an upper house election, or else disappoint voters,” said hirokata kusaba, an economist at mizuho research institute.

“Things could not get any worse after Hatoyama quits, given the current deadlock in many important issues.”

The yen sank to 91.78 per dollar from around 91.10 before the news but that weakness helped boost the nikkei share average, which is heavily populated by big Japanese exporters. bond futures edged higher.

FINMIN kan NEXT?

Finance Minister kan has in the past pressed the Bank of japan to do more to fight deflation and has sounded more positive than Hatoyama about raising the 5 percent sales tax in the future to fund bulging social welfare costs.

That stance would be welcomed by investors worried about Japan’s huge public debt, which is nearly 200 percent of GDP.

“If finance minister kan takes over, it would be welcome news for the jgb market because kan is more proactive about fiscal discipline and about raising the consumption tax than any other cabinet minister,” Mizuho Research’s Kusaba said.

The Democrats swept to power last August after a landslide election win for parliament’s powerful lower house, ousting the conservative Liberal Democratic Party (LDP) after more than 50 years of almost non-stop rule.

But doubts over Hatoyama’s leadership skills have eroded the government’s approval ratings, with one poll showing support at just 17 percent after he failed to keep a campaign pledge to move a U.S. airbase off Okinawa island in southern japan.

Some analysts said the change of the party’s top two leaders would help restore the Democrats’ popularity ahead of the election, although many voters had been outraged when two leaders of previous LDP-led governments quit abruptly after just a year in office.

“Although getting rid of ozawa and Hatoyama won’t win back all that support, at least the Democrats will no longer have to be on the defensive during the campaign.” said Katsuhiko Nakamura, director of research at the Asian Forum japan.

“Looking at the numbers, kan is the most likely to take over. But there was so much criticism of the Liberal Democratic Party for switching prime ministers without an election, he may decide to go to the polls again fairly quickly.”

“This will put an end to downward trend in the popularity of Democrats,” said Hidenori Suezawa, chief strategist at Nikko Cordial Securities.

“Ozawa must have made this decision to win the election.”