Bank Of Japan Rate Change on Friday

What happens if Japan increases or decreases rates.

Rate Hike:

🔸Strengthens the yen as investors seek higher returns in Japan.

🔸Leads to capital outflows from global markets, particularly riskier assets like emerging markets and equities.

🔸Raises global bond yields as Japanese investors repatriate funds, reducing global liquidity.

🔸Increases market volatility due to the shift in global capital flows.

Rate Slash:

🔸Weakens the yen, boosting Japan's exports by making its goods cheaper abroad.

🔸Encourages carry trades, where investors borrow cheaply in yen and invest in higher-yielding assets globally.

🔸Injects liquidity into global markets, especially benefiting equities, commodities, and emerging markets.

🔸Supports risk-taking and global growth, as lower rates promote investments in higher-risk assets.

Pay attention to this tomrw, hiking will see some volatility.