Daiwa Securities: Sanae Takaichi may resist interest rate hikes, and the yen may remain under pressure

Golden Ten Data reported on May 18 that Daiwa Securities strategists stated that, given Japanese Prime Minister Sanae Takaichi may be resistant to monetary policy tightening, the yen is likely to remain under pressure. The strategists pointed out: “The Takaichi government’s policy stance of prioritizing fiscal expansion to address rising prices is putting pressure on the bond and currency markets, resulting in a steeper yield curve and further depreciation of the yen.” They added that if companies pass on higher costs while the Bank of Japan delays raising interest rates, this could further suppress real interest rates and exacerbate the yen's weakness.