Is the Nikkei Over-reliant on USD Strength?
Been watching the Nikkei's performance this year with a mix of intrigue and a bit of skepticism. While it's certainly had a impressive run, it feels like a significant chunk of that upward momentum, especially compared to some of its regional counterparts, is tied directly to the continued weakness of the JPY against the USD. You see the strong export numbers, the corporations benefiting from currency conversion, and it all points back to a strong dollar. If we start seeing a more definitive shift in the $USDMXN trend, or even just a prolonged period of consolidation, how much of that Nikkei strength remains? Are we perhaps over-attributing its performance to underlying fundamental changes in the Japanese economy itself, rather than seeing it as a beneficiary of currency dynamics?
I'm curious to hear if others are seeing it differently. Am I missing a key component here, or is this a valid concern for sustained growth?
It's a fair point, though I'd argue many indices would look a bit less rosy without a favourable currency tailwind. The real question is how long that tailwind can blow before the whole thing starts to feel a bit like a house of cards built on forex alone.