The Nikkei 225 index rose on Monday morning as investors reacted to the latest elections in Japan and the upcoming earnings season. The NI225 index rose to a high of ¥26,870, which was the highest point since June 28th of this year. It has risen by more than 5% from its lowest level in June of this year.
Yen crash continues
The Nikkei 225 index rallied after the latest Japanese election fueled a major yen sell-off. The USD/JPY price surged to a high of 137, which was the highest point in more than 20 years. The Japanese yen has crashed by more than 8% from its lowest level in more than 24 years. The EUR/JPY price also surged.
The USD/JPY pair rose sharply as Bank of Japan’s Haruhiko Kuroda vowed to add more stimulus in a bid to continue supporting the economy. As such, the divergence between the BoJ and the Federal Reserve widened after the strong jobs numbers in the United States. The data showed that the country’s unemployment rate remained at 3.5%.
A weak Japanese yen benefits many Nikkei companies that sell their products abroad like Toyota and Nissan. However, these companies also suffer as the cost of their imports surges.