Sanae Takaichi Poised to Become Japan's First Female Prime Minister Amid Market Volatility
Sanae Takaichi, leader of the ruling Liberal Democratic Party (LDP), is on track to become Japan's first female prime minister. Her election as LDP leader has been met with a surge in Japanese stocks, even as the yen has weakened against major currencies.
Market Reaction and Economic Outlook
Following the announcement of Takaichi's victory, the Nikkei 225 index closed 4.75% higher, surpassing 47,000 for the first time. Shares in real estate, technology, and heavy industry companies saw gains. However, the yen experienced a downturn, hitting a record low against the euro and dropping 1.7% against the US dollar.
Economist Jesper Koll of the BBC attributes the market response to a "knee-jerk reaction" to Takaichi's potential appointment. While her proposed economic stimulus through increased government spending could benefit businesses, Koll warns that it may further weaken the yen due to rising national debt.
Takaichi's Political Stance and Challenges
Takaichi, mentored by the late Prime Minister Shinzo Abe, is a proponent of "Abenomics," which emphasizes high public spending and low borrowing costs. She is also a known admirer of former UK prime minister Margaret Thatcher and her free-market approach.
If confirmed as prime minister, Takaichi will face several key challenges:
- Navigating the US-Japan relationship and managing existing tariff agreements.
- Addressing a sluggish economy, rising household costs, and slow wage growth.
- Uniting the LDP following recent scandals and internal conflicts.
- Potentially renegotiating trade deals with the United States, especially concerning tariffs.
Policy and Ideology
Takaichi is considered a conservative voice within the LDP. She has historically opposed legislation allowing married women to keep their maiden names and is against same-sex marriage. However, she has recently softened her stance, proposing tax deductions for babysitter fees and corporate tax breaks for companies providing childcare.
She has also vowed to revive Abe's economic vision and aims to revise Japan's pacifist constitution. Takaichi is a regular visitor to the Yasukuni Shrine, a controversial site that honors war dead, including convicted war criminals.
US-Japan Relations and Potential Negotiations
With Trump expected to visit Japan soon, Koll suggests that Takaichi will be eager to negotiate a new agreement with the US president "to get the dollar down and to get the yen up."
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