The Bank of Japan's recent move can be considered the most aggressive in nearly thirty years. They directly raised the interest rate from 0.5% to 0.75%, a truly bold move. But the result was bizarre—rather than appreciating, the yen continued to depreciate, falling all the way to 157, while the Nikkei index surged over 2%. What kind of logic is this?

It seems the market had already fully digested the rate hike expectations. When the central bank actually took action, no one followed through. Ironically, right after announcing the rate hike, the BOJ hinted at slowing down the pace of future increases. It’s like stepping on the gas pedal while shouting "I'm out of fuel," causing the market to stall instantly.

But the real issue might be more complex. Japan has had a trade deficit for many years, relying on selling yen and buying dollars to import energy. Over the past two years, global supply chains have been restructured, forcing Japanese companies to move factories from China to Southeast Asia and North America, sharply increasing production costs. The demand for dollars has become a bottomless pit. Under this pressure, the yen has been wildly sold off, and political and economic factors have directly shattered the central bank’s policy intentions.

From another perspective, rate hikes should have made Japanese government bonds more attractive, but global capital, seeing those yields—"Is that all?"—immediately shifted to the relatively undervalued Japanese stock market. Bonds are unwanted, and the exchange rate is free to fall. This reveals the true mindset of capital: as long as it can make money, everything else is irrelevant.

This wave of market behavior actually reflects a deeper change. In the face of complex geopolitical tensions and cross-border capital flows, the central bank’s interest rate tools are increasingly just ornaments. The decision-maker is no longer just the central bank. Is this short-term market chaos, or the new normal of the era? Where exactly is the bottom of the yen? These questions are worth continued observation.