What signal does Katayama Satsuki's stay in office send? Takaichi Sanae strives to protect the “key part” of US-Japan exchange rate cooperation

The Zhitong Finance App learned that according to local media reports, Japan's Finance Minister Katayama Satsuki will remain in office during the upcoming cabinet reshuffle. This decision will support her handling of the economic, monetary, and budget process restructuring. According to reports, Katayama will remain in office during the cabinet reshuffle expected later this month.

Katayama is a key figure in Prime Minister Takaichi Sanae's cabinet and is equal to US Treasury Secretary Scott Bessent. In recent years, Bezent has been increasingly active in making statements about Japan's policy, putting pressure on Japan to raise interest rates, and Katayama has often received help from Bezent to support the yen exchange rate.

This re-election shows Takaichi's trust in Katayama's policy handling, and is also to ensure that her cabinet reshuffle will not cause market fluctuations. Replacing Katayama could disrupt close cooperation between the US and Japan on exchange rate issues and heighten market concerns about Tokyo's spending plans. This could push up bond yields again and cause the yen to depreciate.

According to reports, Takaichi plans to reshuffle the cabinet to consolidate its power within the ruling Liberal Democratic Party. Key positions, including Kihara Minoru (Kihara Minoru) as Chief Cabinet Secretary, Taro Aso (Taro Aso) as Liberal Democratic Party Vice President, and Shunichi Suzuki (Shunichi Suzuki) as Liberal Democratic Party Director General, are likely to remain the same.

The timing of this restructuring coincides with her becoming prime minister in October last year and stepping down as Liberal Democratic Party leader in September next year. In Japan, cabinet reshuffling, whether due to a cabinet reshuffle or a new leader taking office, is not uncommon; in recent years, it has been carried out almost every year. Sometimes, leaders adjust cabinet lineups to boost their declining approval ratings or respond to political crises.

This personnel change is an opportunity for Takaichi to appease some allies who are eager to strengthen their positions. This includes senior members of her ruling coalition partner, the Japan Renewal Party, who have expressed their desire to participate more in government affairs.

Personnel restructuring will also help curb potential rivals before next year's Liberal Democratic Party presidential election. People are concerned about how Takaichi will place potential challengers within the Liberal Democratic Party, such as Minister of Internal Affairs and Communications Hayashi Jiazheng.

Katayama's key role in the US-Japan joint intervention

Since taking office in October last year, Katayama has played a central role in controlling the depreciation of the yen and appeasing investors, as Takaichi's ambitious spending plans have repeatedly raised concerns about Japan's public finances.

At the end of July, she facilitated the first coordinated monetary intervention between the US and Japan since 1998 to support the yen exchange rate. Considering Washington's historical reluctance to interfere in the foreign exchange market, this is a remarkable achievement. This joint action sent a strong signal that the two countries are ready to work together.

Since taking office, Katayama and Bezent have met many times, sometimes by name. It can be seen that the two have a close relationship. On Friday, while discussing his meeting with Beisent at the G20 finance ministers meeting in North Carolina earlier this week, Katayama said that Beisent highly praised Ryoji Takaichi's economic policies and did not question the country's fiscal plan.

Former Ministry of Finance officials and market-savvy films are also particularly concerned with how to appease investors' concerns. Earlier on Friday, she published statistics on budget requests for next year's budget bill. Earlier, a major overhaul was made to the budgeting process. She said this was the largest reform since the end of World War II.