Why Japanese Stocks Are Falling While the Yen Tumbles

In this episode of The Global Economy Podcast, Lucas and Luna examine the surprising divergence between Japanese equities and the yen in mid-2026. While a weaker yen historically boosts Japanese exporters and stocks, the Topix has dropped 6% in the last month even as the dollar-yen rate pushes past 161. The hosts drill into the specific mechanism that's broken: the yen carry trade. With the Bank of Japan signaling a potential rate hike and Hormuz tensions driving a flight to safety, investors are unwinding carry trades at a record pace. Lucas explains the math — borrowing at near-zero in yen to invest in higher-yielding markets — and why the reversal is hitting Japan's largest banks and trading houses hardest. They also examine the knock-on effect on emerging market currencies that had been heavily funded by yen carry. Along the way, they reference the latest trade-weighted dollar index reading of 120.5 and the yen's move from 162 to 161.3 in just a week. A must-listen for anyone trying to understand why the 'Japan is back' narrative has suddenly stalled. #Japan #Yen #CarryTrade #BankOfJapan #Topix #Nikkei #EWY #EmergingMarkets #Hormuz #GlobalEconomy #Currency #Economics #FexingoBusiness #BusinessPodcast #Podcast #GlobalMarkets #Investing #Macro Keep every episode free: buymeacoffee.com/fexingo