Shigeru Ishiba's unexpected victory in the Japanese ruling party's leadership race has led to a strong rally for the yen, amidst market relief over potential interest rate hikes.
Ishiba's criticism of previous monetary stimulus, coupled with his support for interest rate hikes, has significantly boosted market confidence and mitigated earlier losses in the yen.
The bond market in Japan could see fewer hurdles for rate hikes under Ishiba's leadership, which may lead to higher yields and impact economic dynamics.
The current scenario involving narrowing spreads between the US and Japan is likely to further support the yen's performance against the US dollar.
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