Japan unexpectedly raised interest rates by 25 basis points to 0.75% on December 19, marking a 30-year high. Although the market has fully priced in the move and the central bank's stance remains dovish, this action is gradually reshaping the global financial landscape through multiple covert channels—key words are "chronic restructuring" rather than "acute crisis."

**Gradual Exit from Carry Trade**

The $4-5 trillion yen carry trade is facing increasing costs. Rising financing rates mean the carry trade margin is narrowing step by step. While this is unlikely to trigger panic selling (thanks to prior buffers), funds are gradually withdrawing from high-risk assets—emerging markets and certain cryptocurrencies are the first to be affected. These funds are seeking safer havens: flowing back into Japan or shifting into relatively secure US dollar assets. The global markets are entering a new phase of "low carry, high safety allocation."

**Repricing of Exchange Rates and Interest Differentials**

The US-Japan interest rate differential (Federal Reserve 4.25%-4.5% vs Japan 0.75%) is further narrowing, with the USD/JPY briefly breaking above 156. Japanese institutional investors are beginning to reduce their holdings of US Treasuries (approximately $1.1 trillion), which in turn pushes up US Treasury yields (10-year yields rising by 5-15 basis points). Unknowingly, global financing costs are rising.

**Divergence in Emerging Markets**

Southeast Asian countries are most affected. Foreign investment in Vietnam is 32% from Japan, and countries like Indonesia and India face high external debt and current account deficits. They are now under a triple squeeze of "capital outflows + currency depreciation + soaring financing costs." Conversely, economies with current account surpluses and ample foreign exchange reserves are better equipped to withstand shocks.

**Subtle Changes in Supply Chains and Trade**

The yen's appreciation appears to benefit imports, but it weakens the competitiveness of Japanese exports like automobiles and electronics, creating more market space for similar products from China and Korea. Resource-rich countries like Australia benefit from lower import costs, gaining some breathing room—this is an invisible reshuffling of positions.