As the dollar-yen exchange rate moves past ¥155 toward a stronger yen, the impact on Japanese stocks is considered limited. However, the speed of the yen's appreciation may prove more important than its level.
The yen has strengthened past the psychological ¥155 level against the dollar, but the view is that the current exchange rate alone will not have an excessive impact on the earnings of Japanese companies. In particular, unless it is accompanied by an economic deterioration, the current exchange rate is generally considered to have a limited effect on earnings and share prices.
U.S. interest rates and the yen are rising simultaneously, creating a situation in which higher U.S. rates put downward pressure on valuations for Japanese stocks, while the stronger yen is viewed as a headwind to future earnings. As related indicators, TOPIX has remained in the 4,000–4,200-point range and the Nikkei 225 in the ¥63,000–¥67,000 range.
The impact of future dollar-yen movements on Japanese stocks may vary depending on the combination of the pace of exchange-rate moves and interest-rate trends, with the speed of the yen's appreciation being highlighted as a key risk point. Against the backdrop of reviews of past periods of yen appreciation, market participants continue to assess downside risks and the conditions for a rebound.