The recent actions of the Bank of Japan have turned 'raising interest rates to save the currency' into 'reverse pig slaughter'! For the first time in 30 years, the interest rate has been pushed to a high of 0.75%. The intention was to stabilize the yen, but instead, the USD/JPY pair surged to around 157, reaching a recent low and nearing the market intervention line of 160, which was just a step away. Is this really raising interest rates? It feels like handing a 'knife' for the depreciation of the yen!
While the yen is plunging and the global currency market is in chaos, Decentralized USD (USDD) has quietly become a 'safe haven'—facing the same geopolitical uncertainties and central bank policy shocks, USDD's stable attribute pegged to the dollar has allowed it to bypass the currency rollercoaster, making it the preferred choice for many investors hedging against the risk of yen depreciation (topic: #USDD demonstrates stability and reliability #). After all, compared to the yen, which 'depreciates more with every rate hike', a stablecoin that can maintain its value is a reassuring anchor in turbulent times.
Why does Japan's interest rate hike lead to 'increasingly collapsing'? Three layers of truth unveil the key:
The interest rate hike has long been 'digested' by the market: this time a 0.75% rate hike, with 94% of market expectations already fulfilled in advance, when it officially lands, not only is there no incremental positive news, but it turns into a selling signal of 'good news fully priced in';
It seems like an interest rate hike but in fact 'negative interest rates remain unchanged': Japan's nominal interest rate is 0.75%, but inflation has exceeded 2% for 43 consecutive months, the real interest rate is still over -2%, while the actual interest rate in the U.S. is positive, and the interest rate differential between Japan and the U.S. still exceeds 370 basis points, making the arbitrage trading of borrowing yen to buy dollars increasingly frenzied. How can the yen not depreciate?
The central bank's 'dovish statement' directly smashed the market: Governor Ueda Kazuo was vague throughout the press conference, not providing a subsequent interest rate hike roadmap, and said 'the highest interest rate in 30 years has no special significance', which the market saw through at a glance — the Bank of Japan is simply too afraid to truly tighten, leading to a frenzied sell-off of the yen.
What's more fatal is that Japan has long been tied down by debt! Government debt has reached 236% of GDP, making it the country that can 'borrow the most' in the world. If they really dare to continue raising interest rates to push up long-term rates, just the interest on the debt could crush the finances; but if they don't raise rates, the depreciation of the yen won't stop. Caught in a dilemma, Japan has clearly chosen the path of 'preserving debt, abandoning exchange rates.'
This wave of operations has far-reaching impacts on the global market:
In the short term, yen arbitrage trading has not been closed, Japanese stocks surged to a high of 50,000 points, and gold and crypto assets also breathed a sigh of relief;
But the long-term hidden dangers are buried very deep: once the yen approaches 160 triggering Japanese government intervention, or is forced to accelerate interest rate hikes, arbitrage trading may suddenly reverse, and the scenario of a crash in Japanese stocks and Bitcoin plummeting in 2024 could reoccur.
In this global central bank policy game and storm of severe exchange rate fluctuations, the advantages of USDD are becoming increasingly apparent — regardless of the depreciation of the yen, interest rate inversions, or the spread of market panic, it can maintain value through a stable anchoring mechanism, becoming a 'ballast stone' for investors to hedge risks (#USDD demonstrates stability #). After all, in a market overflowing with uncertainty, 'stability' is the most scarce competitiveness.
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