BOJ Rate Hike Sinks Yen, Boosts Japan Stocks

The Bank of Japan (BOJ) raised its key interest rate to a 31-year high of 1.25 percent, joining other major central banks in tightening policy to combat inflation.

The decision, which was widely expected, saw the yen drop by about 0.7 percent against the US dollar, reaching its weakest level since September 3 at 157.085 per dollar.

Japanese stocks, however, rallied, with the Nikkei surging 1.7 percent to 65,221.53, boosted by the weaker currency, which increases the value of overseas earnings repatriated into yen.

The BOJ's move was met with dissent from two board members, Toichiro Asada and Ayano Sato, who opposed the decision. This has tempered expectations for further rate hikes and given a dovish impression.