(Bloomberg) -- Japanese stocks are no longer getting the kind of boost they used to get from a weak yen, as investors turn cautious it will trigger the Bank of Japan to further tweak its policy.

Since trading at a 33-year high earlier this month, the Topix index has struggled to regain its momentum even as the yen slid to levels when Japan intervened last year. Japanese stocks have tended to rise when the yen depreciates, on expectation exporters will benefit.

“Stocks will likely get sold on concern volatility will rise” if the yen weakens further and investors begin to worry the BOJ will adjust its policy, said Hiroshi Namioka, chief strategist at T&D Asset Management Co.  

Yen Replaces Bonds in Driving Speculation of a BOJ Policy Change

While the BOJ has cited debt-market issues as the reason for changes to yield-curve control, Governor Kazuo Ueda said in post-policy meeting press conference last month that foreign-exchange volatility had also been a factor. Ueda’s meeting with Japan’s prime minister this week spurred speculation of another policy change. 

Traders have also been on guard for yen intervention by the government after touching a nine-month low of 146.56 per dollar last week. 

Yen’s Too Weak and Benefits Are Waning, Japan Bourse Chief Says

The weak yen, which helped Japanese stocks outperform global peers this year, is now weighing on the market by raising expectation the BOJ will raise rates, Naka Matsuzawa, chief strategist at Nomura Securities Co., wrote in a report Monday.

©2023 Bloomberg L.P.