Japan Hikes Rates: Is the Cheap-Yen Era Ending?
@Tiger_comments：
The Bank of Japan has raised its policy rate by 25 basis points to 1.25%, the highest level in 31 years. The move passed by a 7-2 vote and was broadly expected by markets. The bigger question now is not the 1.25% level itself, but how far the BOJ is prepared to go from here. This matters far beyond Japan. For years, the yen has been one of the world’s cheapest funding currencies. Investors could borrow at very low Japanese rates and move that capital into higher-yielding assets elsewhere — U.S. stocks, bonds, emerging-market currencies and other risk assets. That is the basic logic behind the yen carry trade. As Japanese rates rise, that trade becomes less attractive. If the yen also strengthens, investors face both higher funding costs and FX losses. That is why every BOJ tightening cycle