Japanese politicians announce campaigns for leadership positions following the Prime Minister's resignation, causing the Japanese yen to depreciate.

In the political landscape of Japan, a significant shift is on the horizon as Sanae Takaichi, a fiscal dove and seasoned politician, has emerged as a frontrunner in the race to succeed outgoing Prime Minister Shigeru Ishiba.

Takaichi, who has held posts as economic security and internal affairs ministers, is now vying for the leadership of the Liberal Democratic Party (LDP). The LDP has announced that it will hold the leadership election on 4 October, according to broadcaster TBS.

Takaichi's potential leadership could have far-reaching implications for Japan's diplomatic relations and investors' decisions. Earlier this year, she visited Taiwan, the democratic island claimed by China, and suggested a potential "quasi-security alliance" with Taiwan and other partners. This move has been closely watched by Japan's powerful neighbor China, and according to Hall of Kanda University, China might take a more hostile stance towards Japan due to Takaichi's hawkish views regarding China.

Takaichi's conservative positions, including revising the pacifist constitution and visiting the Yasukuni shrine, which is viewed by Beijing and others as a symbol of past militarism, further fuel concerns about her stance towards China.

On the domestic front, Takaichi opposes the Bank of Japan's interest rate hikes and advocates for increased spending to boost the economy. This stance has contributed to a surge in stocks and a decline in the yen after Shigeru Ishiba's resignation, as speculation about potential successors' spending policies has caused a shift in market sentiment.

However, the political hiatus is expected to delay the Bank of Japan's monetary policy tightening plans. Money markets are now pricing in a 20% chance of the BOJ hiking rates by the end of October, down from 46% a week ago.

Another notable contender in the LDP leadership race is LDP veteran Takaichi and Shinjiro Koizumi, a political scion. If elected, Koizumi would become Japan's youngest leader in the modern era.

The leadership bid of the nationalistic Takaichi will undoubtedly shape the future of Japan's political and economic landscape. If elected, Takaichi would make history as Japan's first female leader, a significant milestone in the country's political history.

Former Foreign Minister Toshimitsu Motegi and Chief Cabinet Secretary Yoshimasa Hayashi have also announced their plans to run in the LDP leadership election. The outcome of this election will have far-reaching implications for Japan and its relations with the world.

Japanese politicians announce campaigns for leadership positions following the Prime Minister's resignation, causing the Japanese yen to depreciate.