JJapanese Prime Minister Fumio Kishida will not run for a second term as leader of the long-serving ruling Liberal Democratic Party in September, paving the way for a race to succeed him as prime minister.
“I will devote myself with all my strength and as a foot soldier to supporting the new leader chosen through the presidential election,” Kishida said at a nationally broadcast news conference on Wednesday.
Given the LDP’s dominance in parliament, the winner of the race for the party’s leadership, expected in late September, is virtually certain to become the next prime minister. Kishida’s successor will be Japan’s third prime minister since Shinzo Abe, the country’s longest-serving leader, resigned in September 2020.
The yen rose after this news and was around 0.3 percent higher than the dollar at 12:08 p.m. in Tokyo. The Japanese stock indices, however, showed mixed figures: the Nikkei lost 0.2 percent and the Topix gained 0.5 percent. The futures of Japanese government bonds remained little changed.
Support for Kishida has been declining for months, with voters frustrated by his handling of a wide-ranging party slush fund scandal, persistent inflation and the yen’s collapse. Kishida, who took office nearly three years ago, said the series of political finance scandals had undermined trust and weighed on his decision.
Read more: Japan’s ruling party is trying to restore its scandal-plagued reputation. But it is not succeeding
The Kishida government and the central bank sought to present a united front and restore calm to financial markets after the biggest slump in stock prices in more than 30 years this month sparked criticism of monetary tightening and cast a shadow over efforts to encourage households to invest their assets.
Kishida’s predecessor, Yoshihide Suga, criticized Kishida in a media interview on June 23, saying it was crucial for the LDP to convey a “sense of change” in the next leadership election.
“The first and most obvious step to show that the LDP will change is for me to resign,” Kishida said on Wednesday.
Although no parliamentary elections are due until 2025, some polls show that the main opposition party, the Constitutional Democratic Party, is catching up with Kishida’s LDP in terms of current voting intentions.
The next prime minister could still call new elections to consolidate the new government’s mandate, but given their strong position in national politics, the LDP and its smaller coalition partner Komeito are likely to easily retain control.
It is unclear who will replace Kishida as prime minister, although former Defense Minister Shigeru Ishiba was the most popular choice in local media polls. Other names that often appear in polls include Digital Minister Kono Taro, Foreign Minister Yoko Kamikawa and Shinjiro Koizumi, the son of a former prime minister.
“The market implication is that Japanese politics will be foggy,” said Shoki Omori, chief strategist at Mizuho Securities. “Market participants will not like the uncertain situation, especially those who invest in risky assets such as stocks.”
