Bank of Japan raises rates to 0.50% and hits the global 'yen carry trade'

In a historic move that sent jitters through Wall Street trading floors, the Bank of Japan (BoJ) raised its benchmark interest rate to 0.50%, its highest level since the global financial crisis of 2008.

The move triggered a sharp jump in the yen, which surged to 141 per dollar, and forced a rapid unwinding of the popular “yen carry trade”, a speculative strategy in which large international funds borrowed virtually free money at near-zero rates in Tokyo to buy high-risk stocks in New York, London and emerging markets.

The stampede of borrowers in Japan wiped out more than $220 billion in losses across Western markets within 48 hours.