USD/JPY surges as BOJ rate hike to 0.5% fails to support yen

USD/JPY has spiked 1.8% (280 pips) to 157.20 following the Bank of Japan's decision to raise interest rates to 0.5%, the highest level since 1999. Despite the 25 basis point hike from 0.25%, the yen cratered as markets questioned the BOJ's credibility and commitment to further tightening. Japanese government bond yields surged, with the 10-year yield jumping 15 basis points to 1.23%, reflecting investor concerns about policy sustainability. The move represents the BOJ's third rate increase this year, yet the yen's weakness suggests traders doubt the central bank's ability to narrow the interest rate differential with the Federal Reserve's 4.25-4.50% range. Technical indicators show USD/JPY breaking above the 156.00 resistance level with momentum targeting 158.50. The yen's collapse despite tightening monetary policy raises questions about intervention risks and could prompt further volatility in Asian forex markets.