Japanese stocks surged over 4% on Monday and the yen fell after Sanae Takaichi was elected to lead the country's ruling party.

The Nikkei 225 Index was up 4.6%, soaring to 47,852.29, after earlier passing the 46,000 mark for the first time ever.

The yen fell, reaching 149.76 yen against the dollar and hitting a record low against the euro.

Who is Sanae Takaichi and why did her election affect the stocks?

Fiscal dove Takaichi is on course to become Japan's first female Prime Minister this month. An ally of the late Prime Minister Shinzo Abe, she is expected to continue his market-friendly policies.

Among the five hopefuls in the Liberal Democratic party (LDP)  run to replace Prime Minister Shigeru Ishiba, Takaichi was seen as having the most expansionist fiscal and monetary agenda.

The former economic security and internal affairs minister has previously put her weight behind vigorous monetary easing and big fiscal spending.

After winning the party vote on Saturday, Takaichi vowed to address inflation and boost Japan's economy, rural areas and primary industries including farming and fisheries.

As Takaichi began looking at cabinet posts on Monday, the LDP leader's pick for finance minister — a decision  which will be closely watched by investors — was still unclear.

Edited by: Rana Taha