(Bloomberg) -- The yen reversed losses and surged against the dollar as Shigeru Ishiba was voted leader of the Japan’s ruling party, beating a rival who opposed interest rate hikes.
The currency strengthened as much as 1% to 143.30 on the announcement, after weakening as much as 1.2% earlier on Friday. Although the Bank of Japan is independent from the government, speculation of political pressure on monetary policy has seen currency traders betting on the election result.
Ishiba, a party veteran who has served in several senior roles including defense minister, is seen as supportive of the BOJ’s plan to gradually hike rates. He won against opponent Sanae Takaichi in the run-off vote. She had said recently it was “stupid to raise rates now.” Speculation before the results that Takaichi would win had led a drop in the yen.
“The market definitely seemed to be positioning for a Takaichi win,” said Andrew Jackson, strategist at Ortus Advisors. “The markets are reacting drastically to the news that Ishiba has won the run off, as seen by the surging yen.”
--With assistance from Yasutaka Tamura.
(Updates with more details and new prices)
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