The Nikkei 225 storms historic highs: yen weakening fuels rally
Japan's stock market is showing impressive momentum: the Nikkei 225 index hit a new all-time high on Monday, surpassing the 72,000-point mark. This level had been unattainable for the index in all 76 years of its existence. The key driver of this rally was a significant weakening of the Japanese yen, creating ideal conditions for export-oriented companies.
At the close of the trading session, the Nikkei 225 finished at a record 72,353.96 points, gaining 1.55%. The intraday high reached 72,831 points. The broader Topix index also kept pace, rising 1.24% to 4,095.05 points. The market capitalization of Japan's stock market increased by more than 25.74 trillion yen (approximately $156 billion) in a single day. A wave of optimism also swept across other Asian markets: South Korea's KOSPI added 0.7%, and China's SSE Composite Index rose 1.78%.
Concurrently, the yen continues its decline, falling to 161.7 against the dollar. This has brought the Japanese currency very close to the critical level of 161.96, a breach of which would mark its weakest level since 1986. The yen's weakening is occurring despite record interventions by the Japanese government: from late April to late May, 11.73 trillion yen ($73.6 billion) was spent to support the national currency.
Notably, even the Bank of Japan's rate hike from 0.75% to 1% — a level unseen since 1995 — failed to reverse the downtrend. Under normal circumstances, monetary policy tightening strengthens a currency, but in this case, we are observing the classic "buy the rumor, sell the fact" effect. The market has already priced in the regulator's current actions and is focusing on the persistent interest rate differential between Japan and the United States.
Cryptalist Analytical Commentary: This situation creates a unique precedent for the cryptocurrency market. The weakening yen and rising Japanese stocks are fueling interest in risky assets, but at the same time, pressure is mounting on fiat currencies in countries with loose monetary policies. Investors should closely monitor the Bank of Japan's response: if interventions fail to halt the yen's decline, capital will begin to flow more actively into decentralized assets, such as Bitcoin, as a hedge against national currency depreciation. A break of the 162 level against the dollar will be a powerful catalyst for this process.