On 9/27, in response to the presidential election results, the appreciation of the yen progressed, and Nikkei Average futures temporarily recorded a drop of 2000 yen after closing. This time, I will explain what depreciation and appreciation of yen are, and why understanding exchange rates is important when investing in stocks.
Why you should keep a close eye on the dollar-yen exchange rate even when investing in Japanese stocks
1. The US dollar is the most widely used in the worldKey currencyIt plays a central role in international trade and financial transactions. Thus, the dollar-yen exchange rate affects various economic activities not only in Japan but also in the global economy.
2. The total market value of the US stock market accounts for about 50% of the total market value of the global stock market. Trends in the US dollar and US stocks will also have an impact on the Japanese stock market.
3. Trends in the dollar to yen exchange rate are closely related to earnings forecasts and stock price evaluations of Japanese companies.
For investors, the value of their currency against the dollar is a very important indicator. The euro is also the currency traded after the US dollar, but in terms of direct ties and influence with the Japanese economy, the dollar to yen rate tends to attract more attention. Therefore, in this article, yen against the US dollar...

When Prime Minister Takashi is born, it tends to lead to a depreciation of the yen.

Large investors and the like raised funds in yen with low interest rates using US stocks as collateral and repeatedly bought US stocks. As a result, the depreciation of the yen progressed, but US stocks fell due to the Bank of Japan's interest rate hike announcement and concerns about the US recession. Since the yen surged due to the Bank of Japan's interest rate hike announcement, large investors and the like avoided unrealized loss risks and resolved their positions all at once. Dollars were sold, yen was bought, and stock prices crashed. There was a further crash due to panic selling, etc. why? It is presumed that investors who lost money due to a decline in gold or crypto assets have relinquished their gold and crypto assets to fill in the blanks.

Since the Bank of Japan meeting last week, the global stock market has been extremely volatile with major drops and surges. Are you all managing to get through it?
Or did you manage to increase your assets quickly in the short term?
In various ways"The decline exceeds Black Monday,"but what's important is not the price range.
volatilityIt is.
By the way, it is better not to pay attention to the posts of people who try to attract attention with the title and thumbnail saying "the biggest drop in stock price".Fishing Master Discovery Wordlol
As mentioned several times in this moomoo column,What's important is how high the VIX and Nikkei VI reached,...It's just a number that the media wants to make an impact with.
On August 5, 2024, the high of the Nikkei VI reached 85.38, which was higher than the Corona Shock!It becomes important information.
AndAfter experiencing a severe decline where the Nikkei VI exceeds 50, in many cases it will try to rebound autonomously before revisiting the low point....there is such a fact.
This is a story that is usually written in chart textbooks,Even if there is a temporary decline or crash, it often forms a second bottom.

Overseas institutions borrow in the low-interest yen to buy US stocks. If the yen strengthens, institutions will liquidate their positions en masse and cause a crash.
Furthermore, as the yen strengthens further, stocks become chaotic and crash, leading to further panic selling. At the bottom, institutions buy. When bought, buying comes in and the price rises, so institutions sell.
Everyone got caught, right!
I had anticipated the crash, so I had taken profit before the crash.
It was good to be able to buy at the bottom.
The fear index is still at a high level following the Corona, so please be cautious!

Overseas investors borrow in low-interest yen to buy US stocks. If the yen appreciates, investors will liquidate their positions en masse, causing a crash. It's a typical scenario, isn't it?

the yen depreciated!
Next, do you intend to disrupt stocks by causing the US interest rate cut and Japan's interest rate hike around the same time?