Institution: Although the interest rate hike has provided some support for the yen, it is not enough to narrow the significant interest rate differential between the US and Japan.

Charu Chanana, Chief Investment Strategist at Shengbao in Singapore: The Bank of Japan has taken measures in line with market expectations, but the market response shows that its stance is not yet hawkish enough to trigger a significant repricing of the yen. The key is that the Bank of Japan is evidently more concerned about inflation, especially with core inflation rates persistently exceeding the 2% target, but its policy adjustments are still very gradual, and it continues to indicate that the financial environment will remain accommodative. This has made the US dollar vulnerable around the 160 level against the yen. While the rate hike has provided some support for the yen, it is not enough to narrow the significant interest rate differential between the US and Japan, especially if the Federal Reserve remains cautious. The slightly weakened policy signal from the 7-1 vote also indicates that there are still concerns within the Bank of Japan about the impact of tightening policies on economic growth and employment. This provides mild support for the Japanese stock market, as although the Bank of Japan is tightening policy, it has not yet threatened liquidity or corporate profits. In the foreign exchange market, the bigger issue is whether the yen can maintain its gains. If the US dollar remains above 160 after the rate hike, intervention risks will continue to exist - especially considering the decision that the Federal Reserve is about to make, the backdrop of a weakening US dollar may provide a better window for action for Japanese authorities.