The Bank of Japan’s unexpected rate hike could trigger currency volatility and capital outflows from the ROK
The Bank of Japan (BOJ) unexpectedly raised its overnight call rate target on Wednesday to 0.25% from the previous 0 to 0.1% range, marking the highest level since 2008. While it is still low by global standards, this relative spike reflects the BOJ’s broader strategy to move toward a more normalized monetary policy.
This shift poses three primary risks for South Korea: heightened exchange rate volatility, potential capital outflows and threats to economic stability.
The Bank of Japan (BOJ) unexpectedly raised its overnight call rate target on Wednesday to 0.25% from the previous 0 to 0.1% range, marking the highest level since 2008. While it is still low by global standards, this relative spike reflects the BOJ’s broader strategy to move toward a more normalized monetary policy.
This shift poses three primary risks for South Korea: heightened exchange rate volatility, potential capital outflows and threats to economic stability.
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