Yen sinks, sending Japan stocks surging as two dissent to BOJ rate hike
EWJ•Nikkei rises as BOJ signals a dovish tone
Against that backdrop, the Nikkei surged 1.8% to 65,286.14, having been up 0.82% at the midday break.
The Bank of Japan's decision came early in the trading break for stocks and bonds.
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 soaring crude oil prices.
Dovish board members Toichiro Asada and Ayano Sato dissented to the decision.
"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."
Bond yields and yen move after the decision
Japanese 2-year government bond yields, which are most sensitive to monetary policy expectations, sank 2.5 basis points to 1.835%.
The yen extended early declines to be down about 0.6% at 156.92 per dollar at 0334 GMT, and earlier touched 157.05 for the first time since September 3.
Benchmark 10-year Japanese government bond futures pared early gains of as much as 0.38 yen to be 0.23 yen higher at 125.34 yen.
Ten-year JGB yields, which fall when bond prices rise, pared earlier declines of 4.5 bps to be down 1 bp at 2.98%.
The 30-year JGB yield retraced its decline to be flat at 4.075%.
