The Bank of Japan raised its benchmark interest rate by 25 basis points on Friday, bringing it to 1.25%—the highest level in 31 years. The move represents the central bank's second rate increase in three months as it addresses persistent inflation and a weakening yen.
The rate hike came weeks after U.S. Treasury Secretary Scott Bessent publicly urged Japan to tighten monetary policy faster, arguing that yen stability supports broader Treasury market stability.
Following the announcement, the bitcoin-yen pair extended gains by 0.5% to 12.06 million yen on the Tokyo-based bitFlyer exchange. Bitcoin's dollar-denominated price remained largely steady at approximately $76,900, according to CoinDesk data. The yen depreciated against the U.S. dollar, with the USD/JPY pair rising to 156.70 from 156.20.
BOJ rate decisions and yen movements carry significance for global markets due to Japan's extended period of near-zero interest rates over the past decade. This environment enabled traders to borrow cheaply in yen to fund higher-yielding investments elsewhere—a practice known as the carry trade. Market observers have long warned that an unwinding of such positions could pressure assets globally, with early August 2024 cited as a period when equity and bitcoin declines may have reflected carry trade concerns.
