boj's etf sale triggers tokyo exchange turbulence

2025-09-19 general

tokyo, Friday, 19 September 2025.
the bank of japan’s decision to offload its exchange-traded funds sent ripples through the tokyo stock exchange. the nikkei average tumbled to 45,200 yen. this move is part of a broader strategy where the boj maintains its policy interest rate at 0.5%. the etf sales, valued at approximately 330 billion yen annually, are putting pressure on domestic bonds, with long-term interest rates climbing to 1.635%. dissent within the policy board hints at possible rate hikes, further impacting market confidence.

market reaction and sector impacts

The tokyo stock market reacted swiftly to the boj’s announcements [2]. The nikkei average experienced a temporary decline, falling approximately 20 yen to the 45,200 yen level [2]. This downturn was partly triggered by system trading entities reacting to news headlines [2]. Simultaneously, the yen strengthened against the dollar in foreign exchange markets, adding further selling pressure to stocks [2]. While semiconductor-related stocks such as advantest, tokyo electron, and lasertec remained strong, notable declines were observed in stocks like daiichi sankyo, sony group, and terumo [2].

boj’s etf disposal strategy

The bank of japan’s decision involves selling exchange-traded funds acquired during its monetary easing policies [5][6]. the boj began purchasing etfs in 2010 as part of its monetary easing policy [5]. as of now, the boj holds approximately 37 trillion yen in etfs [5]. market analysts believe this decision reflects confidence in the market’s stability, signaling a shift in the boj’s monetary policy stance [5]. the actual etf sales are expected to commence once necessary preparations are finalized [2].

interest rate dynamics and future outlook

Despite maintaining the policy interest rate at 0.5%, the boj’s monetary policy decision revealed internal divisions [1][2]. Two out of nine policy board members dissented, advocating for a rate hike [3]. This dissent has amplified expectations of an imminent rate hike, intensifying selling pressure on domestic bonds and pushing long-term interest rates higher, with the 10-year government bond yield rising to 1.635% [3]. Economists anticipate that the boj will proceed cautiously, with the next policy move expected no earlier than october [4].

political and economic context

The bank of japan’s policy decisions occur amidst a backdrop of political transition and global economic uncertainty [4][7]. prime minister ishiba’s resignation has introduced fluidity into the political landscape [4]. the upcoming ldp presidential election on october 4 adds another layer of complexity [4][7]. globally, uncertainties surrounding us tariff policies and the us economic outlook continue to influence the boj’s considerations [1][4]. the us federal reserve’s recent interest rate cut further complicates the economic picture, prompting the boj to closely monitor us economic trends [4].

Bronnen

boj policy etf sales