Japan’s New PM Seen Stabilizing Yen Amidst Political Shift

Singapore-based OCBC Bank foreign exchange strategist Christopher Wong predicts that Sanae Takaichi’s election as Japan’s Prime Minister will likely lead to increased stability for the yen. This prediction stems from the newly formed coalition government between the Liberal Democratic Party and the Japan Restoration Party, which demonstrates fiscal discipline. This approach is expected to alleviate market anxieties and boost confidence in the Japanese currency. However, Takaichi’s previous pro-stimulus stance might require adjustments as a result of the new political landscape. Further, the current macroeconomic environment may pave the way for policy normalization, thereby reducing uncertainty and potentially allowing the Bank of Japan to raise interest rates on October 30th.