The Nikkei 225 is storming toward 72,000 amid the yen's collapse: Japan's new all-time high
The Japanese stock market has burst into uncharted territory. On Monday, the Nikkei 225 index surpassed the psychologically important level of 72,000 points, setting a new all-time high in the index's 76-year history. It closed at 72,353.96 points, up 1.55% from the previous day, with an intraday peak reaching 72,831 points. The broader Topix index also showed solid growth of 1.24%, ending the session at 4,095.05.
The driving force behind this rally was another weakening of the Japanese yen. The national currency's exchange rate fell to 161.7 against the US dollar, closely approaching the critical level of 161.96. A break of this level would signal a new multi-year low, putting immense pressure on Japan's financial authorities to demand immediate currency intervention.
Record Capitalization and Geopolitical Background
The rise in the Nikkei 225 increased the index's market capitalization by more than 25.74 trillion yen (about 156 billion dollars) in a single day. The strengthening trend also affected other Asian markets: South Korea's KOSPI gained 0.7%, and China's SSE Composite Index rose by 1.78%.
The positive sentiment in Asian markets is fueled by news of productive negotiations between the US and Iran in Switzerland. Mediators from Qatar and Pakistan note progress, despite the belligerent rhetoric of the Trump administration.
Yen Under Pressure: Interventions Not Helping
A paradoxical situation is unfolding in the currency market: stock indices are hitting records, while the yen is heading toward a 40-year low. Despite record injections—from late April to late May, Japan spent 11.73 trillion yen (73.6 billion dollars) to support the national currency—pressure on the yen persists.
Data from Japan's Ministry of Finance shows that over the same period, Japanese investors reduced purchases of foreign securities by 75.6 billion dollars. This amount is almost identical to the volume of the latest currency intervention, indicating a systemic capital outflow.
The Bank of Japan has already tightened monetary policy, raising the key interest rate from 0.75% to 1%—the highest level since 1995. However, contrary to classical theory, the rate hike did not lead to a strengthening of the yen. Speculators continue to increase short positions on the Japanese currency, and the market clearly does not believe in the regulator's ability to reverse the trend.
Cryptalist Analyst Comment: The rise of the Nikkei 225 amid a weakening yen is a classic example of the "Japanese paradox," where a weak currency stimulates export-oriented companies but destroys the purchasing power of the population. For the cryptocurrency market, this situation is interesting because Japanese retail investors, traditionally active in crypto trading, may shift their focus to domestic stocks, temporarily reducing liquidity on digital platforms. However, the long-term trend of yen weakening will inevitably push Japanese investors to seek alternative assets, including bitcoin, as a hedge against fiat currency depreciation.