[Summary]
A strong yen and a weak yen indicate a change in the value of the yen. The important thing is not which one is better, but how it will affect your assets. In this article, you will learn about the structure, advantages and disadvantages, and tips for making investment decisions.
What is yen appreciation/yen depreciation?
In conclusion, it is a concept that shows the strength of the circle.
- Strong yen: The value of the yen is high (you can buy dollars with fewer yen)
- Weak yen: The value of the yen is low (more yen is needed)
It's easier to understand if you look at an example.
| Exchange Rate | Status | Meaning |
|---|---|---|
| 1 dollar = 100 yen → 80 yen | Strong yen | The value of the yen increases |
| 1 dollar = 100 yen → 120 yen | Weak yen | The value of the yen falls |
In other words, "a small number = a strong yen" and "a large number = a weak yen."
Why is it important for investing?
The bottom line is that the value of the asset changes.
The reason is to convert foreign currencies and overseas assets into yen.
Sorting out the effects:
- Stronger yen → yen valuation of foreign currency assets falls
- Yen depreciation → Yen valuation of foreign currency assets increases
For example:
- owns US stocks
- The yen becomes weaker → It is easy to make a profit on a yen basis
Comparison of advantages and disadvantages
There are good and bad aspects to both.
| Perspective | Strong yen | Weak yen |
|---|---|---|
| Overseas travel | Cheap | Expensive |
| Imported goods | Becomes cheaper | Becomes more expensive |
| Exporting companies | Disadvantages | Advantages |
| Foreign currency assets | Disadvantage | Advantage |
The point is that ``evaluation is reversed depending on your position.''
Decision points for investors
In conclusion, preparation is more important than forecasting when it comes to foreign exchange.
Three things to watch:
① Foreign currency ratio
If you have a lot of foreign currency assets, you are likely to be damaged by the strong yen.
② Investment period
- Short-term: The impact of exchange rates is large
- Long term: exchange rates tend to average out
③ Dispersion status
Only yen and dollar are biased.
Mini strategy:
| Situation | Response |
|---|---|
| Yen depreciation progresses | Considering taking profit |
| The yen continues to appreciate | Good opportunity for savings investment |
| Difficult to judge | Diversification with regular savings |
Common Misconceptions
This is a point that beginners often misunderstand.
- Weak yen = not bad (positive for exporting companies)
- Strong yen = not necessarily good (also negative for stock prices)
- Currency exchange is very difficult to predict
What is important is not "hitting" but "designing to withstand".
Summary
- Strong yen = high value of the yen, weak yen = low value
- Significantly affects the value of foreign currency assets
- Which one is better depends on your position
- In foreign exchange, diversification is more important than forecasting
The first thing to do is to check the foreign currency ratio in your assets.