Aerial view of Mt. Fuji, Tokyo Tower and modern skyscrapers in Tokyo on a sunny day.
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Japan’s stock and bond yields soared after the central bank raised interest rates to the highest level in 30 years. The decision comes as inflation has been above target for nearly four years.
The Bank of Japan raised its benchmark interest rate by 25 basis points to 0.75%, the highest level since 1995, in line with forecasts from economists polled by Reuters.
Japan’s consumer inflation rate fell to 2.9% in November, according to government data on Friday. Core inflation, which excludes fresh food prices, was unchanged from 3% in October, in line with the average forecast of economists polled by Reuters.
Japanese Nikkei Stock Average rose 1.03% to close at 49,507.21, and TOPIX rose 0.8% to close at 3,383.66. The Japanese yen fell 0.33% against the dollar to $156.06.
The 10-year Treasury yield rose more than 3 basis points to 2.022%, the highest level since 1999, according to LSEG data. The yield on the 20-year bond rose more than 2 basis points to 2.962%.
“The government’s approval of the interest rate hike appears to be a move led by the Ministry of Finance, which is concerned about the depreciation of the yen,” Ken Matsumoto, Japan macro strategist at Credit Agricole CIB, said in a note after the decision.
Matsumoto said that if the yen depreciates significantly during the year-end and New Year holidays, when liquidity is low, the Ministry of Finance will “actively intervene in foreign exchange.”
South Korea’s Kospi rose 0.65% to 4,020.55, while the small-cap Kosdaq rose 1.55% to 915.27.
Reuters reported that the Bank of Korea is intervening in the foreign exchange market by selling dollars in order to curb the won’s depreciation, according to Yun Kyung-soo, director of the international department of the Bank of Korea. He added that authorities are carrying out “smoothing operations” to counter sudden and unilateral movements due to severe supply-demand imbalances.
The won has recently been hovering near its lowest level since 2009, and was recently at 1,479 won against the dollar.
Australia’s S&P/ASX 200 index rose 0.39% to 8,621.4.
hong kong Hang Seng Index rose 0.59%, while the mainland CSI300 rose 0.34% to close at 4,568.18.
India’s Nifty 50 rose 0.5%. Shares in ICICI Prudential AMC, one of India’s largest asset management companies, rose as much as 20% in its trading debut on Friday following a 106 billion rupee ($1.17 billion) initial public offering.
In the U.S., the S&P 500 index fell overnight for the first time in four days on Thursday, boosted by weaker-than-expected inflation data that brightened the outlook for lower interest rates in 2026 and blowout guidance from chipmaker Micron Technology.
The broader market index rose 0.79% to settle at 6,774.76, while the Nasdaq Composite Index rose 1.38% to 23,006.36. The Dow Jones Industrial Average rose 65.88 points, or 0.14%, to close at 47,951.85.
—CNBC’s Lim Hui Jie, Sean Conlon and Pia Singh contributed to this article.
