Investing.com – The recent appointment of new Japanese Prime Minister Shigeru Ishib has led to gains in the yen, but UBS doubts his appointment will materially change the pace of yen appreciation.
At 05:00 ET (09:00 GMT), the stock was trading 0.1% higher at ¥143.81, having fallen to ¥142.09 on Friday after Ishiba ended the leadership contest of the country’s ruling Liberal Democratic Party with won a narrow victory.
Ishiba, a former defense minister, is a critic of previous monetary stimulus and markets had largely expected a victory for hardline nationalist Sanae Takaichi, a vocal opponent of further rate hikes.
However, Ishiba has toned down his hawkish bias in recent weeks, UBS analysts said in a September 30 note, including his comments to local media last weekend that “monetary policy should remain accommodative.”
Ishiba’s comments now echo dovish comments from BoJ Governor Ueda at the September policy meeting, where he indicated that the BoJ will refrain from further rate hikes if the market remains unstable and added that the yen’s strength has reduced upside risk to inflation.
“In this context, we believe that the latest political developments in Japan still justify a more gradual appreciation of the JPY, rather than an accelerated one,” UBS added.
In the coming weeks we will gain more clarity about the policy choices of the new Ishiba government, especially through the formation of the new cabinet members.
“Our USDJPY forecasts for the end of the quarter are currently at ¥147, ¥143, ¥140 and ¥138 through 3Q25, and we reiterate our preference to sell the USDJPY during rallies heading into the ¥145-¥147, to position ourselves for a longer period. term drop,” UBS added.
