Recently, many friends have asked: Japan is about to raise interest rates again, will it trigger a financial market explosion? How should we hedge?

Don’t panic yet. Japan raising interest rates is no longer new. Since March last year, this is already the fourth time. It’s like boiling a frog in warm water—the heat is slowly increasing, not a sudden boil.

Why raise rates? The reasoning is simple—things are getting more expensive, and money is less and less durable. Prices have been rising for fifty consecutive months, even a bowl of ramen on the street has increased in price. The yen exchange rate is also declining, leading to soaring import raw material costs. The purpose of rate hikes is to cool down inflation and stabilize the exchange rate.

What impact does this have on us ordinary investors? It mainly depends on whether you are engaging in "Yen arbitrage." Simply put, borrowing low-interest yen to profit from differences in other markets.

Even now, despite rate hikes, Japanese interest rates remain low, and the arbitrage window is still open. Funds won’t withdraw all at once overnight. Moreover, this situation has lasted over a year, and the market has already priced it in, so there’s no need to panic.

Where will this money flow? Mainly to the US, South Korea, and Europe. For our market, the direct impact is limited.

The real thing to watch is your own portfolio structure. If you’re always chasing hot topics and short-term trades, any news can unsettle you. But if you hold long-term value assets with a clear layout, these fluctuations are just ripples on the lake.

Ultimately, the biggest risk has never been external news, but your own failure to think things through before rushing in.

Don’t let the news lead you by the nose. Understand the underlying logic and do what you need to do.