Japanese politics and policy updates
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Yoshihide Suga will step down as Prime Minister of Japan after a year in office. During this period, his reputation has plummeted due to his efforts to contain Covid-19.
Yoshihide Suga announced on Friday that he will not seek re-election in this month’s election. Leadership competition Said Toshihiro Nikai, secretary general of the ruling Liberal Democratic Party. The winner of that game will lead the party to a general election that must be held before November 30th.
The news continued the rally in the Japanese stock market and brought the benchmark Topix Index to a 30-year high as traders bet that the replacement of leadership would bring greater stimulus.
Yoshihide Suga’s withdrawal marked the return of political turmoil and a short term as prime minister after a long period of stability in Japanese politics. Prime Minister Shinzo Abe, He resigned more than a year ago on the grounds of health.
“Frankly, I was surprised, but I believe this is a decision made by the Prime Minister after careful consideration, and we have all accepted it,” Nikai told reporters.
Suga’s approval rate has dropped below 30%. Cause concern The Liberal Democratic Party will face a difficult general election, and many large cities in the country are still in a state of Covid emergency.
When the Prime Minister’s poll ratings failed to recover after the Tokyo Olympics, his influence Start to drain. Increasingly formidable competitors, including former foreign minister Fumio Kishida, have launched leadership challenges.
With Yoshihide Suga out, competitors from other factions of the Liberal Democratic Party will compete with Kishida. Opinion polls show that the most popular candidate will be the Minister of Vaccine Taro Kono, who speaks fluent English and has served as the Minister of Defense and Minister of Foreign Affairs. But some colleagues do not trust Kono’s independent policy approach.
Other candidates in the polls include former Defense Minister Shigeru Ishiba, Environment Minister Shinjiro Koizumi, and even Abe.
The party election will be held on September 29.
The factional politics of the Liberal Democratic Party may play a decisive role, and the winner needs a coalition supported by the whole party. The most important are the 96-member faction related to Abe and the 55-member group led by Finance Minister Taro Aso.
A stock trader in Tokyo said that in the short term, investors may welcome the news of Yoshihide Suga’s departure. Although the prime minister’s political future and his so-called reformist agenda may end several weeks of increasing uncertainty, the Japanese stock market has continued to rise since August 20.
Takeo Kamai, head of executive services at CLSA in Tokyo, said: “The next question the market will focus on will be how many seats the Liberal Democratic Party may lose in the general election, but in the short term, I think investors will welcome this and people like Kishida. More opportunities for excitement”.
Affected by this news, the yen-dollar exchange rate fell below 110 yen, within the recent trading range. But traders expect Japan to continue to weaken until its next leader is elected.