Nikkei Index Hits 70,000 for the First Time
Claire Weston
The Bank of Japan raised rates by 25 basis points to 1% — the highest in over 30 years — and the Nikkei hit 70,000 intraday, yet the yen barely moved. Markets had fully priced the hike; the real question is whether a second one comes this year.
Why did stocks rally on a rate hike?
The BOJ lifted its policy rate from 0.75% to 1%. The Nikkei touched 70,000 intraday on Tuesday and closed up 0.1% at 69,404.50.
This means → The hike itself was not a headwind — Tokyo Tanshi data showed a 99% probability priced in before the decision.
In plain terms = Everyone already knew it was coming. Once it landed, it was a classic "sell the rumor, buy the fact" move.
Why didn't the yen strengthen?
Rate hikes usually boost the domestic currency, but the yen weakened slightly from about 160.05 to about 160.15 against the dollar.
Matsui Securities analyst Sho Suzuki noted the statement carried no hawkish surprise, so the move flowed into equities, not the currency.
This means → The FX market cares less about "did they hike?" and more about "will they hike again?" — with no fresh hawkish signal, the yen had no catalyst to rise.
How likely is a second hike this year?
Tokyo Tanshi data showed a 32% probability of another hike in October, as of just before the decision.
State Street Asia-Pacific economist Krishna Bhimavarapu argued the BOJ may signal a second hike this year — and that signal would be critical for the yen.
This reflects a market in "one hike confirmed, second hike wait-and-see" mode. Deputy Governor Shinichi Uchida's afternoon press conference is the nearest signal window.
What other variables are in play?
The BOJ also announced it will pause its bond-purchase tapering in April 2027, meaning no further tightening of bond-market liquidity in the near term.
Oil remains a pressure point for the yen: WTI crude traded near $81 a barrel, below the March peak of $119 but still above the pre-war February average of roughly $65.
In plain terms = The higher oil goes, the larger Japan's import bill — and the more the yen is pulled toward weakness, even with rate hikes pushing the other way.
Content is for reference only, not financial advice.