Markets in Japan have been thrown into a new period of volatility after the surprise election of Sanae Takaichi, a pro-stimulus conservative hard-liner, in the contest to lead Japan’s long-governing Liberal Democratic Party.
Ms. Takaichi, who is on track to become prime minister later this month after her Saturday victory, distinguished herself from her campaign rivals with a distinct policy vision for Japan’s economy, the world’s fourth-largest.
Though she softened her messaging significantly in recent days, Ms. Takaichi, an acolyte of former Prime Minister Shinzo Abe, has long embraced the view that Japan should return to so-called Abenomics, which promoted more government stimulus and easy-money policies.
Speculation that she would implement a form of “neo-Abenomics,” including low interest rates, led the yen to weaken sharply against the dollar on Monday morning in Asia.
Years of ultralow interest rates have meant that many investments in Japan have offered smaller returns than other countries, like the United States. That, in turn, has caused investors to sell yen to buy higher-paying foreign assets, flooding the market with yen and driving its price down.
Also on Monday, Japan’s benchmark Nikkei 225 stock index rose around 4 percent in early trading. Investors bet that a weak yen, which boosts the competitiveness of Japanese products overseas, would be a boon for domestic exporters. Government spending and various tax-cut plans promoted by Ms. Takaichi are also expected to bolster the economy in the short term.
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The post Yen Plummets, Stocks Rally: Markets Greet Japan’s Next Leader appeared first on New York Times.
