Yen and Japanese Stocks Rise Following BoJ Rate Hike – Asia Market Wrap

Japanese stocks recovered losses, and the Yen fluctuated as traders digested the BoJ’s interest rate hike and slowdown in bond purchases.

In a report by NHK, the BoJ hiked interest rates to around 0.25% and announced a reduction in bond purchases to around ¥3 trillion ($19.6 billion) per month in Q1 2026. Japanese government bonds pared losses, as analysts had anticipated a more aggressive cut. The Nikkei 225 index advanced 0.2%, as the currency fluctuated between gains and losses.

Given the Yen’s importance as a carry trade currency, the decision will have an impact on global financial markets. As traders await BoJ Governor Kazuo Ueda’s press appearance in the afternoon for more information, the rest of Asia is seeing significant volatility due to a flood of economic data, crucial earnings, and positioning ahead of the Fed’s decision later Wednesday.

In other news, the Australian Dollar sank and short-term bonds surged as core inflation unexpectedly declined in the fourth quarter, encouraging traders to increase bets on a Reserve Bank interest rate cut. Chinese markets rose as expectations grew that Beijing will increase support for its faltering economy. US equities futures rose on speculation that Chair Jerome Powell would suggest a probable rate drop in September.