State Street: Delayed interest rate hike expectations exacerbate yen weakness, but the policy window is still not closed

Bart Wakabayashi, the manager of the Tokyo branch of State Street, stated that the market had previously sold off the yen significantly due to the policy proposals of the leader of Japan's Liberal Democratic Party, Sanae Takaichi. If her appointment as Prime Minister cannot gain consensus, the market will certainly react. Takaichi is not a supporter of interest rate hikes, and the delay in expectations for the Bank of Japan to raise interest rates has intensified the selling pressure on the yen. However, there may be room for policy adjustments. The market generally expects the Bank of Japan to remain on hold this month, but Wakabayashi believes this matter is not yet settled