TOKYO (Reuters) – The appointment of Satsuki Katayama as Japan’s next finance minister on Tuesday could give markets reason to pause before pushing the yen too low, but it could also help the country’s new prime minister, Sanae Takaichi, find new ways to finance bold economic stimulus plans, analysts said.
Takaichi’s appointment of Katayama as his finance minister – overseeing exchange rate policy, debt management and the budget – means Japan now has its first female prime minister and the first woman in the top financial role.
In an interview with Reuters in March, Katayama, 66, a veteran upper house lawmaker and former Finance Ministry bureaucrat, said Japan’s economic fundamentals suggest the real value of the yen is closer to 120-130 to the dollar.
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These comments came as the yen had fallen to around 150 against the dollar due to market expectations that the Bank of Japan would ease the pace of monetary tightening.
The dollar briefly fell to around 150.50 yen on a local media report that Katayama would take the job, before recouping losses and rising above 151 yen.
“Considering his previous comments, it appears that Katayama is in favor of reversing a weak yen. Markets may have seen this as similar to the views of US Treasury Secretary Scott Bessent,” said Akira Moroga, chief market strategist at Aozora Bank.
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Speaking to reporters after his appointment, Katayama said it is desirable for exchange rates to move stably, reflecting fundamentals. She declined to comment on the Bank of Japan’s monetary policy.
Takaichi was elected Japan’s first female prime minister on Tuesday in a country where men still hold most of the power, appointing Katayama.
The yen and bond yields fell after the parliamentary vote, due to market expectations that Takaichi, a supporter of expansionary fiscal and monetary policy, will spend heavily and oppose a rate hike by the central bank.
A former bureaucrat at the Ministry of Finance and well-versed in fiscal matters, Katayama has a knack for currency diplomacy and has befriended former and serving executives at the ministry that oversees currency policy.
She is known for her outspokenness and incisive decisions, which contrasts with current Finance Minister Katsunobu Kato, who rarely goes off script and keeps a low profile.
Katayama’s appointment comes at a time of rising costs of living, attributed in part to rising import prices caused by a weak yen. These factors harmed families and the ruling party’s approval ratings.
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While her background at the Finance Ministry may lead her to call for fiscal discipline, some analysts say she could use her experience to help Takaichi find ways to finance his bold spending plans.
“It will know how to find revenue sources if Takaichi wants to expand fiscal spending,” said Hiroyuki Machida, director of Japan foreign exchange and commodity sales at ANZ.
Katayama said he will focus on revitalizing the economy with an expansionary fiscal policy.
