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Japanese Stocks Would Collapse If Yen Gains More Than 5%
Japanese stocks can withstand a quick bounce in the yen, but will start to feel the pinch if the currency’s advance goes deeper and becomes more entrenched. Gains in the Nikkei 225 Index will start slowing if the yen begins to advance sustainably against its major trading partners and in particular the dollar. That could turn into losses should the currency strengthen more than 5% this year. The following chart shows how a strengthening of the yen against the dollar may affect the Nikkei’s fortunes, based on data going back almost a quarter of a century. The results are similar when the dollar is substituted with ... (full story)