Japan's political kingmaker says Trump policies may weaken yen

Leaders of Japan's main political parties attend a debate session ahead of October 31, 2021 lower house election in Tokyo

The Democratic Party for the People leader Yuichiro Tamaki attends a debate session with other leaders of Japan's main political parties, ahead of October 31, 2021 lower house election, at the Japan National Press Club in Tokyo, Japan October 18, 2021. REUTERS/Issei Kato/Pool/ File Photo

Source: X90003

U.S. President-elect Donald Trump's economic and policies could further weaken the yen's value against the U.S. dollar, the head of an opposition party that Japanese Prime Minister Shigeru Ishiba needs to stay in power said on Friday.

"The potential increase in tariffs or tax cuts could lead to inflation (in the U.S.) and therefore higher interest rates," Yuichiro Tamaki, leader of the Democratic Party for the People (DPP) said at a press conference on Friday.

Following Japan's general election on Oct. 27, Tamaki's party, which has 28 lower-house members, has gained influence over the ruling Liberal Democratic Party, which lost its majority in the chamber.

Any increase in prices in Japan resulting from higher import costs could squeeze households in Japan and further undermine public support for Ishiba.

Tamaki said that the Bank of Japan (BOJ) should refrain from raising interest rates until wage growth was consistently outpacing inflation.

"Domestic policies should be conducted for domestic objectives," he said.

The BOJ ended negative interest rates in March and raised short-term rates to 0.25% in July.

This article was produced by Reuters news agency. It has not been edited by Global South World.

By Reuters