Leika Kihara and Makiko Yamazaki
The potential appointment of Satsuki Katayama as Japan’s next finance minister could prompt markets to rethink whether the yen will be too low, but could also help the country’s new leader find new ways to fund bold economic stimulus plans.
Japan’s other likely prime minister, Sanae Takaichi, has finalized a plan to appoint Katayama as finance minister, local media reported on Tuesday, making her the first woman to hold the role. The report briefly lifted the dollar to around ¥150.50 before recovering some losses.
In an interview with Reuters in March, Katayama, a 66-year-old veteran upper house lawmaker and former finance minister bureaucrat, said Japan’s economic fundamentals suggested the yen’s true value was closer to 120-130 to the dollar.
The comments came as the yen fell to a multi-decade low of $150 as markets expected the Bank of Japan to ease monetary tightening. The yen is currently around 151 to the dollar.
“Given her previous comments, Katayama appears to be advocating for a reversal of the weak yen. Markets may have thought this was similar to US Treasury Secretary Scott Bessent’s approach,” said Akira Moroga, chief market strategist at Aozora Bank.
Katayama declined to comment on Tuesday.
Takaichi is expected to be elected as Japan’s first female prime minister on Tuesday, marking a symbolic breaking of the glass ceiling in a country where men still hold most of the power.
RESPONSIBLE, DETERMINED, MINISTERIAL RESPONSE
A former finance ministry bureaucrat with a deep understanding of fiscal matters, Katayama has a knack for currency diplomacy and is friends with former and current ministry heads overseeing exchange rate policy.
She is known for being outspoken and making sharp decisions, which contrasts with current Finance Minister Katsunobu Kato, who rarely goes off script and keeps a low profile.
In an interview in March, Katayama said the administration of US President Donald Trump does not want too much weakness in the yen against the dollar.
Indeed, Bessent said last week that the yen would reach its level if the central bank follows “appropriate monetary policy” in its latest move to slow the BOJ’s pace of rate hikes.
Katayama’s appointment would come at a time when the cost of living has risen, partly blamed on higher import prices driven by a weak yen. These factors hurt households and the ruling party’s approval ratings.
As a former bureaucrat, Katayama is well versed in the internal budgeting process of the finance ministry.