The yen falls again

Expect more volatility ahead of the Bank of Japan's next meeting on April 26.

By Jim J. Jubak Apr 8, 2013 5:36PM
Image: Japan (© Stockbyte/SuperStock)Too far too fast?

The yen fell another 1.7% against the U.S. dollar on Monday to 99.23 to the dollar. The currency has now tumbled 6.2% since Thursday’s more aggressive than expected move by the Bank of Japan.

The yen is now down 21.4% in six months.

Support for the yen is just ahead, though, at 99.75 to the dollar and I think the Japanese currency may need to make a couple of runs at 100 yen to the dollar before it breaks below that level.

Some backing and filling would be only normal after this big a move, and I’d expect to see some profit-taking over the next few days, especially among stocks of exporters and big banks that have moved up so strongly in the last week. For example, shares of auto exporter Mazda Motor (MZDAF) are up 17% from April 2 through the Tokyo close on April 8. With the intervening weekend that’s a huge move in just four trading sessions.

The Bank of Japan meets again on April 26. Given the fireworks at the April 3 to April 4 meeting, I’d expect lots of volatility in the run up to that session.

I don't think you need to sell existing positions in Japanese stocks, such as my Jubak's Picks recommendations of Toyota Motor (TM) or Mitsubishi UFJ Financial Group (MTU) during this pause. But if you've been looking for an opportunity to increase your holdings in Japanese stocks -- for the short-term currency move -- you might get an opportunity during this period.

At the time of this writing, Jim Jubak didn't own shares of any companies mentioned in this post in personal portfolios. When in 2010 he started the mutual fund he manages, Jubak Global Equity Fund (JUBAX), he liquidated all his individual stock holdings and put the money into the fund. The fund may or may not own positions in any stock mentioned. For a full list of the stocks in the fund as of the end of the most recent quarter, see the fund's portfolio here
Tags: TM
3Comments
Apr 9, 2013 2:31AM
avatar

Why should the Yen be worth one yen above 150-dollar?Maybe 200
They owe more than america!
They own NO natural resources.
Their exports are now made all over the world.
I live in Japan and their was no Economic reason for the yen to go up to those ridiculous highs.
The real reason was the lowering of the worthless US dollar!

   yeaI am american
So why don't you write it like it really is?
The Japanese are now playing the american game of printing money.

Apr 9, 2013 5:29PM
avatar
And why shouldn't they?......and all the other countries?  The U.S. is playing a game of  "cheating" for an advantage, and that is the proper response.
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