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The yen returns to its falling ways--and that's good news for Japanese stocks
02/05/2013 4:36 pm EST
The yen dropped to a low of 93.52 to the dollar on the news. That’s down from yesterday’s close at 92.38 yen to the dollar. (Because the exchange rate is commonly quoted as yen to the dollar, a higher number means the yen is cheaper against the dollar.)
Currency traders now believe that the yen will quickly hit 94 to the dollar. That level has some support, but no one expects it to hold for long. Expectations say the yen will fall to 100 or 105 to the dollar in relatively short order.
Today’s events and the movement of the yen are likely to reverse the overnight drop in Japanese equities as the Tokyo market reacted to yesterday’s rout in Europe. My suggestion, if your nerves can stand it, is to use volatility to the downside on days like yesterday as an opportunity to establish or build positions in Japanese stocks. The longer-term trend on the yen is down versus the dollar and most other global currencies and that means the longer-term trend on the shares of Japanese exporters is up.
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