Business Maverick: Abe’s Death Raises Doubts Over BOJ Policy Support as Yen Gains

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As traders absorb the tragic news of the death of former Japanese Prime Minister Shinzo Abe, they are also left facing a debate about how the loss of a strong advocate for the central bank’s super-easy monetary policy could affect markets in the days ...

The initial market reaction to the shock news earlier Friday that Abe had been shot was a rush to haven assets.The yen climbed alongside Treasuries, with the currency rising as much as 0.5% against the dollar as details filtered through about the shocking attack in the western city of Nara duringfor Sunday’s national election. The former premier’s death was confirmed publicly around six hours later.

While Prime Minister Fumio Kishida distanced himself from Abe’s subsidiary remark, he has continued to support the BOJ policy that first emerged under Abe. The shock assassination of Abe, though, is causing some observers to reassess where the yen, equities and credit markets may head next, given his clout in political circles and stance on monetary policy.

However, economists largely argue that any impact will be limited. Some of them say the continuation of the BOJ’s stimulus stance after Abe stood down as premier in 2020 shows it was no longer dependent on his support.Japanese Stocks Pare Gains as Abe’s Shooting Spurs Uncertainty“It’s very unlikely this will open the door for the BOJ to raise rates or change its easing course to be on the same page as the Fed and the ECB,” said Shinichiro Kobayashi from Mitsubishi UFJ Research & Consulting.

 

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