Is FX Dangerous at Yen depreciation around 162? Why domestic stocks are safe despite dollar strength and GOLD lows

The yen exchange rate has fallen to the 162 yen level at one point, hitting a record-low level not seen in about 39 and a half years since December 1986, and this news was reported.

What do you think about investment destinations now? Some may think, “If the yen is weakening, isn’t it better to buy dollars in FX?” but in reality, the situation is complex: the interest rate hike expectations in the United States and the interest rate differential between the Bank of Japan’s 1% policy rate and the U.S. rates have expanded to over 3%, accelerating the yen carry trade.

Moreover, GOLD is underperforming in dollar terms, but in yen terms it is relatively overvalued thanks to the yen’s depreciation. While households face higher import prices and increased mortgage burdens, some argue that export companies are profiting but not sufficiently returning profits domestically.The extreme level of 162 yen per dollar is mainly due to expectations of U.S. rate hikes, the U.S.-Japan interest rate differential, and the yen carry trade, with the pain of import inflation and higher loan burdens affecting households first.

On the other hand, export companies are benefiting but are not sufficiently returning internal reserves domestically, and pressure from the Trump administration is also a future source of volatility. GOLD remains relatively cheap in dollar terms but is overpriced in yen terms, andFX presents high volatility and intervention risk, making it dangerous for individuals.

There is no need to trade forcibly; a diversified investment focusing on domestic stocks and ETFs is comparatively safer, indeed. However, the adverse effects on small and medium-sized enterprises and consumer spending should not be overlooked. Check the latest economic indicators and, with a long-term perspective, make decisions to protect your assets according to your risk tolerance.