Investing.com – The recent nomination of future Japanese Prime Minister Shigeru Ishiba has boosted the value of the yen, but UBS doubts his appointment will significantly change the rate of yen appreciation.

At 05:00 ET (09:00 GMT), it was 0.1% higher at 143.81 yen, after falling to 142.09 yen on Friday after Ishiba won the leadership contest of the country’s ruling Liberal Party. Democratic and a narrow victory.

Ishiba, a former defense minister, is a critic of past monetary stimulus, and markets had largely expected a victory for hard-line nationalist Sanae Takaichi, a vocal opponent of further interest rate increases.

However, Ishiba has softened his hawkish stance in recent weeks, UBS analysts said in a Sept. 30 note that included his comments to local media over the weekend that “monetary policy must remain accommodative.”

Ishiba’s comments now line up with dovish comments from BOJ Governor Ueda at the September policy meeting, where he signaled that the BOJ would refrain from further interest rate increases if the market remained volatile, and added that the strength of the yen had reduced the risk of rising inflation.

“In this context, we believe that recent political developments in Japan continue to justify a more gradual, rather than accelerated, path for yen appreciation,” UBS added.

In the coming weeks, we will gain more clarity on the political leanings of the fresh Ishiba administration, especially with the addition of fresh cabinet members.

“Our quarter-end forecasts for USDJPY currently stand at 147, 143, 140 and 138 yen by 3Q25, and we maintain that we favor selling USDJPY in an uptrend towards the 145-147 yen range to position for a longer decline in the long term ” added UBS.