Internal Party Rivalries Sealed Ishiba’s Fate

Samantha Luan

Economic

Forex

Political

Summary:

Japan’s outgoing prime minister Shigeru Ishiba announced his resignation on 7 September 2025. He will hand over the prime ministership once his Liberal Democratic Party (LDP) chooses a new leader on 4 October. While opposition parties, which together command a parliamentary majority, could combine forces to elect a new prime minister, such cooperation is highly unlikely.Ishiba’s resignation followed a meeting of the LDP parliamentary caucus on 2 September. This launched procedures for holding a snap party leadership vote. That would require approval from most LDP members of the Diet and prefectural branches, with the result scheduled to be announced on 8 September. Rather than being pushed into such a vote, Ishiba decided to jump.

Ishiba narrowly won the party leadership in October 2024 on his fifth attempt. Despite a limited core base of party support, many of its lawmakers voted for him in the hope that his reputation as a maverick would help the fortunes of a government mired in funding scandals. Successive electoral setbacks dashed these hopes and sealed his fate.The LDP suffered major losses in both the House of Representatives election in October 2024, called immediately after Ishiba assumed office, and the House of Councillors election in July 2025. Having lost its parliamentary majority, the government has been forced to seek support from one or more opposition parties to pass legislation.

The fallout from funding scandals involving dozens of LDP members of the Diet, tariffs threatened by the Trump administration and rising costs of living eroded support for Ishiba’s government. Yet one of the biggest obstacles came from within his own party.Ishiba garnered recognition and popularity among the electorate for daring to criticise LDP policies under his predecessors, including former prime minister Shinzo Abe. These criticisms earned him the hostility of many colleagues, whose support he found indispensable once he became party leader. This paradox characterised the Ishiba administration and ultimately proved its undoing.

Before coming to power, Ishiba championed his support for allowing married couples to keep separate family names, a stance endorsed by a majority of the Japanese public and most opposition parties. Yet in office, he deferred to social conservatives within the LDP, resulting in a related bill being shelved in June.In his resignation statement, Ishiba lamented that, lacking wide support within the LDP, he has made every effort to seek intra-party accommodation and unity, at the price of losing his own unique individuality.

Ishiba’s approval rating and public support have never sunk to the level that compelled his predecessor, Fumio Kishida, to step down in 2024. In fact, protests calling for Ishiba not to quit in the wake of the LDP’s poor performance in the upper house election took place in July and August.On 30 August, LDP secretary general Moriyama Hiroshi warned about the gap between opinions within the party and among the general public. This warning went unheeded. Immediately after the LDP’s upper house election defeat, former prime minister Taro Aso publicly called for Ishiba’s resignation, a demand echoed by members of his own as well as other factions. These escalating demands forced Ishiba’s hand.

A majority of those in attendance at an 8 August gathering, including members of the former Abe and Motegi factions, demanded a formal caucus meeting on an early leadership election that would effectively cut short Ishiba’s term.For some of Ishiba’s internal critics, factional interests coincide with ideological stances. A group of conservative Diet members issued a statement calling on him to refrain from making a speech commemorating the 80th anniversary of the end of the Second World War and criticised the ‘immorality’ of a prime minister refusing to step down following the LDP’s poor electoral performance.

The LDP’s substantial losses in the House of Councillors election likely made Ishiba’s position untenable following historical precedent. But both the long-term cause and immediate trigger of his resignation have less to do with swings in the electoral pendulum than power struggles within his party.Another round of power struggles has ensued following the announcement of a leadership election. 2024’s runner-up candidates — former internal affairs and communications minister Sanae Takaichi and Minister of Agriculture Shinjiro Koizumi — are favourites. Other candidates include Chief Cabinet Secretary Yoshimasa Hayashi and former ministers Takayuki Kobayashi and Toshimitsu Motegi.

Takaichi, who would become Japan’s first female prime minister if elected, is known for her advocacy of socially conservative views and loose monetary policy, and may appeal to right-leaning voters who supported the LDP under Abe but have recently moved to the populist Sanseito. Koizumi, a fourth-generation politician, has earned accolades for addressing the problem of soaring rice prices in his agriculture portfolio.The incoming prime minister faces the challenges of not only higher costs of living and an uncertain security environment, but also increasing alienation from the established party system. Ishiba cited avoiding polarisation within the LDP as a key reason for his resignation. His successor would do well to focus on avoiding polarisation in Japanese society.

Source: East Asia Forum

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Michelle

Economic

Forex

India has implemented significant Goods and Services Tax (GST) reforms aimed at reducing retail prices and stimulating consumer spending.

These changes, effective from September 22, 2025, are expected to lower the cost of everyday items and simplify the tax structure for businesses.

GST reform simplifies tax structure

The GST overhaul reduces the number of tax slabs from four to two: 5% and 18%. This simplification is designed to ease compliance for businesses and make goods more affordable for consumers.

Items such as toothpaste, shampoo, and packaged food now fall under the 5% tax bracket, down from 18%. Electronics and small cars have been moved from the 28% slab to 18%, while life and health insurance policies are now exempt from GST.

Expected impact on consumer spending

The Reserve Bank of India (RBI) anticipates that these tax cuts will lead to lower retail prices, thereby boosting consumer demand.

The RBI's September 2025 bulletin notes that improved agricultural sowing is also expected to help control food prices, further supporting household budgets.

Potential challenges and considerations

While the reforms are expected to stimulate consumption, there are potential challenges. The government projects a revenue loss of ₹480bn ($5.5bn) due to the tax reductions.

Additionally, some sectors may face higher taxes; for example, apparel priced above ₹2,500 is now taxed at 18%, up from 12%, which could impact premium clothing brands.

These GST reforms are part of India's broader efforts to simplify its tax system and encourage domestic consumption, which is a key driver of economic growth.

The full impact of these changes will become clearer in the coming months as businesses and consumers adjust to the new tax landscape.

"India implements tax reforms to boost retail consumption" was originally created and published by Retail Insight Network, a GlobalData owned brand.

Source: Yahoo Finance

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Gerik

Economic

Trade Talks and Investor Concerns

South Korea’s trade negotiations with the Trump administration have been complicated by political and financial uncertainties. President Lee Jae Myung signaled that agreeing to U.S. demands requiring $350 billion in direct investments could necessitate a currency swap to prevent excessive dollar demand. His remarks heightened market fears that the deal might fail or strain South Korea’s financial system, recalling vulnerabilities from the 1997 Asian financial crisis.

The selling pressure accelerated this week, with analysts estimating that channeling the full $350 billion to the U.S. without an FX swap could push the won down by roughly 100 won per dollar annually over the next three years. The currency’s limited global footprint accounting for just 2% of global FX trading compounds its susceptibility to shocks, unlike the more widely traded yen.

Policy Options and Swap Considerations

President Lee has called for a dollar swap line with the Federal Reserve, similar to arrangements the Bank of Japan maintains. However, U.S. authorities may prefer alternative measures such as the FIMA Repo Facility rather than unlimited swap lines, limiting Seoul’s flexibility in managing potential outflows. The Korean finance ministry and central bank have declined to comment, leaving investors uncertain about the available policy tools to stabilize the currency.

The proposed $350 billion investment is tied to a broader trade deal capping tariffs at 15% on South Korean goods. If the deal fails, tariffs could rise to 25%, undermining competitiveness against Japanese and European exporters. The combination of investment-related outflows, political risk, and tariff uncertainty has contributed to the won’s current volatility.

Market participants see the situation as a high-risk scenario for the Korean economy. FX dealers warn that the won could slide further toward 1,450 per dollar if capital transfers begin. Political rhetoric around potential impeachment, though unlikely, and historical sensitivity to currency crises add additional layers of risk. For now, the won remains under pressure as traders navigate the uncertain trajectory of U.S.-Korea trade negotiations.

The South Korean won is grappling with heightened volatility amid stalled U.S. trade talks and looming capital outflows. The interplay of political considerations, historical financial vulnerabilities, and the mechanics of a potential $350 billion investment fund is intensifying pressure on the currency, underscoring the challenges policymakers face in stabilizing exchange rates during complex international negotiations.

Source: Reuters

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Glendon

Cryptocurrency

US Senate Holds Hearing on Crypto Taxation

The US Senate Finance Committee will hold a hearing on crypto taxation on October 1 at 10:00 AM ET, featuring industry leaders and policymakers at the Capitol.

The hearing aims to clarify tax obligations for digital assets, potentially influencing market dynamics and regulatory compliance within the cryptocurrency industry.

The US Senate Finance Committee is scheduled to hold a hearing on crypto taxation on October 1 at 10:00 AM ET. This meeting will feature insights from leading market players and experts as they explore the taxation of digital assets.

The session, chaired by Senator Mike Crapo, will include executives such as Lawrence Zlatkin from Coinbase, and experts like Annette Nellen from AICPA. They aim to clarify tax rules for assets like BTC and stablecoins, influencing future tax policies. Senator Mike Crapo stated, "The session, titled 'Examining the Taxation of Digital Assets,' will be held on Oct. 1."

The hearing could significantly impact the crypto market with changes in regulation and policy. Stakeholders anticipate potential adjustments in investor behavior and market positions as the US prepares to refine digital asset taxation frameworks.

Financial implications include potential shifts in venture capital, trading volumes, and institutional interest. Regulatory clarity might stabilize taxation environments, assisting in broader market participation and reducing barriers for small transactions.

Historical events indicate potential volatility as stakeholders anticipate regulatory outcomes. Policy adjustments could enhance or restrict digital asset innovations, influencing the market's future trajectory. Observers will closely watch the financial market response post-hearing.

Source: CryptoSlate

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Gerik

Economic

Tariff Reduction Seen as Positive Step

The German Association of the Automotive Industry (VDA) praised the U.S. action as a constructive measure for German car exporters. VDA President Hildegard Mueller described the tariff reduction as an important step toward alleviating trade pressures on the automotive sector, which has faced elevated costs and uncertainties due to prior tariffs imposed on European vehicles and parts.

Despite the tariff rollback, Mueller emphasized that the remaining duties continue to pose a tangible challenge for German automakers. Exporters still encounter trade barriers that can affect competitiveness, pricing, and planning for production and supply chains. The industry underlined that while the reduction is welcome, it is not a comprehensive solution to the structural trade hurdles that European automakers face in the U.S. market.

Call for Continued EU Engagement

The VDA urged the European Union to maintain pressure on the U.S. government to secure further improvements in trade conditions. Strengthened transatlantic cooperation and advocacy are viewed as essential to ensuring a stable, predictable trade environment, supporting investment, and safeguarding the long-term competitiveness of Germany’s automotive sector.

While the U.S. tariff reduction marks a positive development for German car exporters, the VDA underscores the need for continued diplomatic and trade engagement by the EU. Addressing remaining barriers will be crucial for maintaining growth, stability, and global competitiveness in the automotive industry.

Source: Reuters

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Gerik

Commodity

Economic

Price Movements and Market Dynamics

Gold steadied close to $3,742 per ounce, roughly $50 below the record set earlier in the week. Prices dipped on Wednesday after U.S. new-home sales unexpectedly surged in August to the fastest pace since early 2022, alleviating some concerns about economic slowdown. Silver and other precious metals also saw upward movement, reflecting broader strength in commodities amid supportive factors such as robust central-bank purchases and positive ETF inflows.

Traders are closely monitoring Federal Reserve signals, as rate cuts generally benefit non-yielding assets like gold. Fed Chair Jerome Powell has emphasized caution, balancing signs of labor market weakness against inflation risks. Treasury Secretary Scott Bessent highlighted market frustration over the lack of a clearly defined Fed rate-cut agenda. Expectations for two rate cuts this year are partly driving investor sentiment in precious metals.

Support from Central Banks and ETFs

Gold has benefited from strong central-bank demand and increased ETF inflows, which hit a three-year high recently. Year-to-date, bullion-backed ETF holdings have risen almost every month, adding approximately 400 tons overall. China’s plans to hold foreign sovereign bullion reserves further bolstered market sentiment, contributing to a peak of $3,791.10 per ounce earlier this week.

Investors are awaiting the U.S. personal consumption expenditures (PCE) price index on Friday, the Fed’s preferred measure of underlying inflation. A slower pace of PCE growth could strengthen arguments for rate cuts, likely supporting bullion prices further. Analysts anticipate that softer inflation readings may reinforce expectations for accommodative policy, sustaining demand for gold and other precious metals.

Gold remains near historic highs, influenced by a combination of monetary policy uncertainty, robust central-bank purchases, and strong ETF demand. Upcoming U.S. economic data, particularly inflation metrics, will be critical in shaping investor expectations and the trajectory of precious metals markets in the near term.

Source: Bloomberg

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FXOpen

Economic

Forex

The US dollar firmed after comments from Federal Reserve Chair Jerome Powell, who suggested that further rate cuts are unlikely in the coming months. While markets continue to price in policy easing by the end of the year, the current rhetoric points to a pause in the near term, supporting the dollar in USD/JPY and USD/CAD pairs.

In the upcoming sessions, the key driver for the currency will remain US and Canadian data releases. Today, investors will focus on US Q2 GDP, weekly jobless claims and durable goods orders. Additional interest will centre on the Kansas City Fed manufacturing index and weekly housing reports. Tomorrow, attention will shift to the Core PCE Price Index — the Fed’s preferred measure of inflation — along with Canadian July GDP and US household income and spending data.

USD/JPY

After a false break below key support at 146.30 last week, USD/JPY buyers managed to form a bullish “piercing line” candlestick pattern. This setup helped lift the pair towards the upper boundary of the medium-term range at 146.30–149.00. Technical analysis of USD/JPY chart indicates a potential return inside this corridor, unless we see a daily close above 149.00 in the coming sessions.

Events likely to influence USD/JPY:

● Today at 15:30 (GMT+3): US core durable goods orders;

● Today at 15:30 (GMT+3): US GDP;

● Today at 15:30 (GMT+3): US initial jobless claims.

USD/CAD

USD/CAD buyers have brought the pair close to August’s highs for the year. If the 1.3900–1.3920 range establishes itself as support, the price may extend gains towards the psychological resistance at 1.4000. Conversely, as the USD/CAD chart suggests, a rejection from these levels and the formation of reversal patterns could trigger a downward correction, testing key levels in the 1.3820–1.3850 area.

Events likely to influence USD/CAD:

● Today at 20:00 (GMT+3): remarks by Michael S. Barr, Fed Vice Chair for Supervision;

● Tomorrow at 15:30 (GMT+3): US Core PCE Price Index;

● Tomorrow at 15:30 (GMT+3): Canadian GDP.