Financial Associated Press, July 8 (Editor Zhou Ziyi) After the sudden shooting of former Japanese Prime Minister Shinzo Abe, the yen strengthened instead, triggering market debate. Some analysts worry that the Bank of Japan's ultra-easy monetary policy is likely to lose support in the future.

 

The yen rose as much as 0.5% as a wave of safe-haven buying began in Japan's foreign exchange market after the midday shooting on Friday.

 

At about 11:30 a.m. local time in Japan (10:30 a.m. Beijing time) on the 8th, former Japanese Prime Minister Shinzo Abe was shot while delivering a speech in Nara City. According to a previous report by Japanese TV, Abe has lost his vital signs, and Japanese officials have not yet announced his death. Japanese Prime Minister Fumio Kishida said that Shinzo Abe is in critical condition and hopes he can tide over the difficulties.

 

Abe is best known for his "Abenomics" policies. He has revitalized Japan's weakened economy with unprecedented monetary easing and regulatory reforms to free the economy from deflation.

 

The shooting of Abe, who is a major proponent of the ultra-easy policy of current Bank of Japan Governor Haruhiko Kuroda, could affect the tone of this monetary policy.

 

Since the beginning of this year, the Bank of Japan has maintained a dovish attitude and has still implemented an ultra-loose monetary policy. The yen has been weak, making it the worst-performing major currency this year.

 

Yen edged higher

 

After the incident came out, the Nikkei 225 index plunged to the green, erasing the recent gains, and the foreign exchange market was also affected. The yen rose nearly half a percent against the dollar, with the yen rising to 135.33.

 

If the news accelerates the central bank's rethinking of current policy, the yen could extend gains, while stocks could fall, some analysts said.

 

However, some analysts believe that any impact from the incident will be temporary, since Abe is currently only a former prime minister.

 

Japan will hold upper house elections on Sunday, and the Japanese Ministry of Internal Affairs and Communications said after the shooting that it did not plan to postpone or change the original election date.

 

Here are some comments from market players:

 

short-term and long-term effects

 

Tetsuo Seshimo, portfolio manager at Saison Asset Management Co., said, "Abe's 'Abenomics' has a lot of influence, and he also supports Kuroda's policies. Abe's image as a 'spiritual pillar of monetary easing', Probably one of the reasons for this turmoil."

 

"However, Abe is not currently prime minister, which means that his events do not indirectly affect the economy and monetary policy," Seshimo added. "This shocking event may have short-term effects, but not necessarily in the long run. have a significant impact on the market.”

 

"As he is not the current prime minister, the reaction is likely to be temporary," said Fukuhiro Ezawa, head of financial markets in Japan at Standard Chartered Bank.

 

However, Tomoichiro Kubota, senior market analyst at Matsui Securities, said, "The event may have an impact in the medium to long term, and the market will see a sharp appreciation of the yen and a fall in the stock market."

 

Subsequent policies may change

 

"The BOJ's policy, which has been supported by Abe, may change," said Kubota of Matsui Securities.

 

"After all, after Fumio Kishida came to power, the Liberal Democratic Party has been vigorously promoting the reflation policy advocated by 'Abenomics'," Kubota believes. "If Abe's political influence declines, it will affect the current policy."

 

Mari Iwashita, chief market economist at Daiwa Securities, said, "Since Abe may be more well-known overseas than current Prime Minister Fumio Kishida, the reaction in the foreign exchange market may be greater when London trading starts." He also believes that, Abe's assassination will lead to changes in Japan's follow-up policy.

 

Masahiro Yamaguchi, senior market analyst at SMBC Trust Bank, said Abe is well-known outside of Japan, so if the government's existing policies, including its stance on monetary easing, change as a result, it would show that Abe had previously exerted significant influence on multiple fronts. will have a negative impact on the market.

 

The current yen volatility is still in a range

 

Rodrigo Catril, a strategist at National Australia Bank, said there was a small amount of safe-haven buying in the yen following news of the assassination of former Prime Minister Abe, with an additional premium on political risk ahead of the weekend's elections.

 

Daiwa Securities Iwashita noted that "in Sunday's election, the ruling Liberal Democratic Party is likely to receive sympathetic votes."

 

"Participants in the JGB market may take a wait-and-see approach," he said.

 

Akira Moroga, currency product manager at Aozora Bank in Tokyo, pointed out that it is unclear whether the yen will appreciate further, but the fact that Shinzo Abe is not the current prime minister should be taken into account.

 

He also said the yen will be in a range ahead of the U.S. non-farm payrolls data tonight, and there won't be much floating range.