Weak yen not always good for Tokyo stocks, some analysts say
Conventional wisdom about the market being helped by a falling currency might not hold if rates climb.
A weak Japanese yen may not be as beneficial for Tokyo stocks as commonly assumed, according to some analysts. While a weaker currency can positively impact earnings, excessive and rapid weakening could raise concerns about declining stock valuations, warns Japan equity strategist Chisa Kobayashi of UBS SuMi TRUST Wealth Management.
She explains that currency devaluation could lead to higher interest rates, potentially triggering a sell-off in the market. Recently, there has been increased apprehension about the potential for "bad" interest rate hikes, as 10-year Japanese government bond yields have surged to unprecedented levels, reaching 3% for the first time in 30 years.
Written by urgent.news from Japan Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
