Yen may weaken as Japan leadership change clouds BOJ outlook, MUFG says

MUFG Bank strategist Michael Wan warned the yen could remain weak in the near term following Prime Minister Shigeru Ishiba’s decision to step down.

The choice of successor will be key for market direction:

• Sanae Takaichi, from the LDP’s conservative wing, is viewed as yen-negative given her backing for easy monetary policy and fiscal stimulus,
• while Agriculture Minister Shinjiro Koizumi is seen as a reformist figure with appeal to younger voters.

Wan added that the Bank of Japan may hold off on further rate hikes until the political outlook becomes clearer.

Background:

Yen is off to a weak start with the resignation of Japanese Prime Minister Ishiba

Monday open levels, indicative FX prices, 8 September ’25. Japan PM Ishiba quit, yen lower

• USD/JPY update, around 148.10. ICYMI, JPY slammed lower after Japan PM Ishiba resigned
• USD/JPY – we got a gap to fill!

We should get a date for the leadership election on Tuesday:

• Japanese media reports that the ruling party leadership election could be in early October

This article was written by Eamonn Sheridan at investinglive.com.