westphalia1: What is the correlation (or connection) of the Japanese YEN and NASDAQ?
I am a new investor. Some of the investment messageboards (in light of the recent Wall Street crisis) suggest that when the Yen goes down in value-the NASDAQ moves up. And the other way around. Is this true? ONLY EXPERIENCED INVESTORS PLEASE RESPOND! Thanks
Answers and Views:
Answer by StopSpending
Right now, everyone is concerned about “the carry trade”, borrowing in a low interest rate currency, like the yen, and buying other assets (like US stocks). A strengthening yen (which means fewer yen to purchase a dollar) is being taken as a sign that people are unwinding the carry trade, hence selling stocks.
This may be an actual relationship; however, it is at best a temporary relationship, so don’t think you can use this in the long-term.