Today is the day of the Bank of Japan's interest rate hike, and the exchange rate of the US dollar against the Japanese yen is truly outrageous and counterintuitive. The yen actually depreciated by 2 from 155-157, and just now it even hit 157.66 at one point. Looking at it this way, today's interest rate hike in Japan might as well not have happened, as it directly revealed the predicament that Ueda has no bullets left. Japan's nominal interest rate has now risen to 0.75%, but core inflation is at 3.0%, so the real interest rate = 0.75% - 3.0% = -2.25%. The US now has a nominal interest rate of about 3.5% and inflation of 2.7%, so the real interest rate = 3.5% - 2.7% = 0.8%. This creates a 2.25% + 0.8% = 3.05% interest rate differential between the two countries. The market was previously worried that Ueda would hawkishly state that further rate hikes are needed in the future, but he admitted that Japan's real interest rate is extremely low. This completely alleviated capital's concerns, leading to a rush back to continue doing carry trades, resulting in a large number of people selling yen to buy US dollar assets, which naturally caused the exchange rate to collapse rapidly. Next, it may be necessary to approach the key psychological integer level of 160 before the Bank of Japan intervenes. I wonder if everyone remembers that the market had previously speculated that the Bank of Japan might sell US Treasuries during the Thanksgiving holiday when liquidity was poor to intervene in the exchange rate, but given that Japan now has to pay the US 550 billion in protection fees + needs the US to support them during the Sino-Japanese crisis, Japan may not have the confidence to operate independently.