As the BOJ rapidly increases its benchmark rate toward 1.25%, the cost to service those yen-denominated loans rises sharply. At the same time, the strengthening Japanese Yen makes those debts more expensive to pay back.Market Turbulence: To mitigate risk, global funds are forced to rapidly close out these positions by selling foreign equities and bonds to buy back yen. This mass unwinding creates severe, sudden volatility spikes in international stock markets, as seen in global sell-offs whenever the BOJ signals aggressive tightening.
5
1September 8, 2026 988 2
