Yen sinks, sending Japan stocks surging after BOJ hike draws two dissents

The yen fell as much as 1% to 157.55 per dollar JPY=, its weakest level since Sept. 3. Against that backdrop, the Nikkei rallied as much as 2% at one point before ending the day with a 1.4% gain to 65,018.95. ## Tech shares lead gains Tech shares led the advance. Memory chip manufacturer Kioxia 285A.T gained 9.4%, and chip-equipment makers Lasertec 6920.T and Advantest 6857.T rose 8.7% and 6%, respectively. The BOJ raised its key rate to a 31-year high of 1.25% as had been widely expected, joining the U.S. Federal Reserve just days before and the European Central Bank last week in tightening policy to fight persistent inflationary pressures from high crude oil prices. Dovish board members Toichiro Asada and Ayano Sato, both appointees of reflationist Prime Minister Sanae Takaichi, dissented from the decision. Yields on 2-year JGBs JP2YTN=JBTC, the tenor that is most sensitive to monetary policy expectations, sank 2 basis points (bps) to 1.84% as of 0758 GMT. Yields move inversely to bond prices. The 10-year yield JP10YTN=JBTC also fell by 2 bps to be at 2.97%. TOKYO, Sept. 18 (Reuters) - The yen weakened and Japanese government bonds slid after the Bank of Japan raised interest rates in a well-telegraphed move, as dissent from two board members cast doubt on how aggressively it will tighten policy from now. Japanese stocks rallied, helped by the weaker currency, which boosts the value of overseas earnings when repatriated into yen. "The rate hike itself was in line with market expectations, but the two dissenting votes came as a modest surprise," said Hirofumi Suzuki, chief FX strategist at SMBC in Tokyo. "The outcome has somewhat tempered expectations for further rate hikes and conveyed a dovish impression." In his post-meeting press conference after the stock market close, BOJ Governor Kazuo Ueda struck a hawkish tone, saying a 50 bp rate hike in future should not be ruled out, although it would be the result of falling behind the curve. He also said policy had entered a phase of stabilising inflation near the 2% target, and that policy needed to be adjusted in a timely manner. Finance Minister Satsuki Takayama said officials would not hesitate to take further joint intervention as they did in July, putting markets on alert ahead of a 5-day-long weekend in Japan. The impact on the yen was minimal, with the currency plumbing its low of the day after Ueda's news conference ended. Markets expect the BOJ to continue raising rates in 25-basis-point increments roughly once a quarter, doubling its previous pace of tightening. "Financial markets had got a bit ahead of themselves in pricing in the pace of rate hikes, so expectations for a 50-basis-point hike this time or consecutive rate hikes have been somewhat pushed back," said Junki Iwahashi, senior economist at Sumitomo Mitsui Trust Bank. "In my view, it ultimately comes down to the exchange rate. If downward pressure on the yen intensifies, the BOJ will raise rates flexibly. If yen weakness eases, it may push back hikes somewhat."

Yen sinks, sending Japan stocks surging after BOJ hike draws two dissents

Nikkei rises on tech strength as yen falls

Tech shares lead gains

BOJ raises rates to 31-year high, but policy path remains uncertain

Yen weakens as BOJ hike and dissents temper tightening expectations

Ueda signals future hikes remain possible as officials watch the yen

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