Yen at 160: How Japan’s Weak Currency Fueled a Record Market Rally Amid Policy Shifts

The yen’s slide to 160 against the U.S. dollar – its weakest level in 34 years – became the unexpected catalyst for Japan’s market surge Monday, as exporters rallied while the Bank of Japan walked a policy tightrope. The Nikkei’s 1.8% gain to 38,900 masked deeper tensions between currency stability and economic growth.

Key Dynamics:

1. Export Windfall

   • Toyota estimates $3B annual profit boost from weak yen

   • Robotics firm Fanuc (+3.1%) sees order book swell

2. Policy Paradox

   • BOJ expands bond purchases despite inflation at 2.8%

   • Government considering “stealth intervention” to slow yen decline

3. Regional Ripple Effects

   • Korean won also weakening, helping Samsung compete

   • China’s yuan control boosts exports, squeezing global competitors

Market Reactions:

• Japan’s export index hits highest since 1989

• Short-covering rally in previously battered stocks

• Tourism stocks slump on reduced purchasing power