BoJ Rate Hike Sparks Paradoxical Yen Sell-Off

The Bank of Japan (BoJ) surprised markets by raising interest rates by 25 basis points to 1.25%, its highest level in 31 years.

The decision was made with a 7-2 vote, with two board members expressing concerns about the sustainability of the current economic recovery and the validity of the rate hike given low inflation below 2%.

Despite this, the Japanese yen depreciated sharply after the announcement, reaching its highest level since early September around 157.20.

This paradoxical move has sparked interest in the USDJPY currency pair, with investors engaging in mass profit-taking following the classic 'buy the rumor, sell the fact' rule.