Yen Surges as Ishiba's Unexpected Victory Eases Market Concerns
The yen rebounded after Shigeru Ishiba won the leadership contest of Japan's ruling Liberal Democratic Party, becoming the next prime minister. Markets had anticipated a victory for nationalist Sanae Takaichi. Analysts see Ishiba's win as easing pressures on the BOJ's rate hike process, resulting in a stronger yen.
The yen bounced back on Friday, recovering from earlier losses, after Japan's former defence minister Shigeru Ishiba emerged victorious in the leadership contest of the ruling Liberal Democratic Party. With this win, Ishiba is set to become Japan's next prime minister.
Ishiba, a known critic of past monetary stimulus, told Reuters that the central bank was 'on the right policy track' with its rate hikes thus far. The yen surged more than 1% to 143.05 yen per dollar, recovering from its weakest point of 146.49 earlier in the day.
Markets had been bracing for a victory by hardline nationalist Sanae Takaichi, a vocal opponent of further interest rate hikes. Analysts at UBS noted, '(Ishiba's victory is) a surprise to the market, which seems to have been bracing for a Takaichi victory.' Marcel Thieliant, head of Asia-Pacific at Capital Economics, added that Ishiba's cautious stance was seen as clearing the way for further rate hikes.
(With inputs from agencies.)
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