BOJ Rate Hike Triggers Yen Sell-Off, Dollar Rises

The Japanese yen plummeted to its lowest level since September 3, falling by 0.8% and trading around 143.25 against the US dollar.

This sharp intraday slide puts the yen on course for an over 2% weekly decline, marking its worst weekly performance since October of last year.

The yen's sell-off was triggered by a widely anticipated yet dovish rate hike from the Bank of Japan, which lifted its benchmark borrowing costs by 25 basis points to 1.25%, taking Japanese interest rates to a 31-year high watermark.

However, two board members dissented in favor of holding rates steady, softening the central bank's hawkish tone and dampening market expectations for rapid follow-up tightening.

BOJ Governor Kazuo Ueda emphasized that while the central bank is acting pre-emptively to avoid being forced into drastic moves later, it is not contemplating aggressive monetary shock therapy.