Japanese markets reacted in a seemingly counterintuitive fashion on Friday after the country's central bank hiked benchmark interest rates to their highest in 31 years. Interest-rate increases ordinarily support a country's currency, push up its bond yields, and put pressure on its stock market. Japan's currency, bond yields, and stock market did exactly the opposite. The yen weakened past 157 against the dollar, the yield on the 10-year Japanese Government Bond slipped, while the Nikkei 225 gained 1.5% as the BOJ raised its policy rate to 1.25%. The hike brought the policy rate to its highest level since 1995, and came just three months after its previous increase.
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