After the Bank of Japan’s latest policy meeting on Friday, BOJ Governor Kazuo Ueda announced a 25-basis-point rate hike. Unexpectedly, the yen did not strengthen—instead, it weakened after the decision was released. The market had originally expected the BOJ to accelerate its tightening pace, even triggering the unwinding of some yen carry trades. But with the recent hawkish stance from the Federal Reserve—and the “hike shoe” having finally dropped—the yen is once again facing considerable downside pressure.
Why did the yen fall even though rates were raised? The core reason is that this 25-basis-point hike had already been fully priced in by the market. Investors’ attention quickly shifted to the future path of additional hikes. If the market believes the BOJ’s tightening pace will still fall far behind the Fed, or if Ueda’s post-meeting comments are seen as relatively mild and dovish, expectations for the interest-rate differential between the US and Japan will keep widening. Once the market forms this consensus, USD/JPY could once again move toward the important 160 level.
From a traditional macro-market perspective, rapid yen depreciation significantly increases the risk of Japan stepping into the market with intervention. Although officials have repeatedly stressed that they are focused on the speed of exchange-rate moves rather than any specific level, if the exchange rate again tests the 160 threshold, it will inevitably test the policymakers’ tolerance. For global liquidity, uncertainty around yen carry trades remains like a sword hanging overhead—capable at any moment of triggering sharp volatility in FX and bond markets.
For the crypto market, it’s also worth objectively tracking the yen’s direction and the staying or unwinding of carry trades. Looking back at prior episodes when extreme yen volatility triggered liquidity shocks, capital remains highly sensitive to macro developments. If the yen stays weak and intervention does not occur, global risk assets may hold steady in the near term. But if subsequent policy intervention—or a large-scale return of carry-trade funds—follows, liquidity and sentiment across the entire crypto market could face new challenges. For now, my suggestion is: watch more, act less, and take a rational view of macro changes.👀
#BOJ #USDJPY #CryptoMarket
Why did the yen fall even though rates were raised? The core reason is that this 25-basis-point hike had already been fully priced in by the market. Investors’ attention quickly shifted to the future path of additional hikes. If the market believes the BOJ’s tightening pace will still fall far behind the Fed, or if Ueda’s post-meeting comments are seen as relatively mild and dovish, expectations for the interest-rate differential between the US and Japan will keep widening. Once the market forms this consensus, USD/JPY could once again move toward the important 160 level.
From a traditional macro-market perspective, rapid yen depreciation significantly increases the risk of Japan stepping into the market with intervention. Although officials have repeatedly stressed that they are focused on the speed of exchange-rate moves rather than any specific level, if the exchange rate again tests the 160 threshold, it will inevitably test the policymakers’ tolerance. For global liquidity, uncertainty around yen carry trades remains like a sword hanging overhead—capable at any moment of triggering sharp volatility in FX and bond markets.
For the crypto market, it’s also worth objectively tracking the yen’s direction and the staying or unwinding of carry trades. Looking back at prior episodes when extreme yen volatility triggered liquidity shocks, capital remains highly sensitive to macro developments. If the yen stays weak and intervention does not occur, global risk assets may hold steady in the near term. But if subsequent policy intervention—or a large-scale return of carry-trade funds—follows, liquidity and sentiment across the entire crypto market could face new challenges. For now, my suggestion is: watch more, act less, and take a rational view of macro changes.👀
#BOJ #USDJPY #CryptoMarket