Resurgent Yen Sends Shockwaves Through Japanese Stock Market

A resurgent yen has caused Japanese stocks to plummet, leading to the Nikkei share average losing 20% of its value in just three sessions. This abrupt downturn follows the Bank of Japan's recent rate hikes, raising concerns about future earnings for major exporters and the broader Japanese economy.

A resurgent yen saw Japanese stocks plummet on Monday, causing investors to reassess earnings prospects and abruptly ending a months-long rally in Tokyo's market.

The Nikkei share average has lost 20% of its value in just three trading sessions, with Monday's 12.4% drop marking its second-largest fall on record since the 1987 Black Monday crash. This downturn stems from the yen's recent strengthening, prompted by the Bank of Japan's rate hikes, most recently last week.

Companies, particularly exporters like Toyota, will now need to perform on their own merits without the cushioning effect of a weaker yen. While the yen's appreciation has broad economic benefits, it has also driven up costs for small businesses and households. For exporters, the stronger yen affects overseas product pricing and profit margins.

(With inputs from agencies.)