Even with interest rate hikes in Japan and the US, the yen does not strengthen. Stocks that lose money on exchange rates and stocks that are less likely to lose money
Even though interest rates were raised, the yen did not strengthen
In September, both the United States and Japan raised interest rates. The US raised rates by 0.25% at the FOMC, the first time in about three years since 2023. Japan’s central bank also raised its policy interest rate to 1.25%.
“Japan raises rates → yen strengthens → sell export stocks.” I imagine quite a few people acted on this line of thinking.
However, the dollar-yen exchange rate fluctuated between the 152 and 160 range just in September alone. One moment it seemed to swing sharply toward a stronger yen at the beginning of the month, and the next it returned to a weaker yen after the FOMC. I think those who traded based on exchange rates were the ones most tossed around.
So this time, I stopped trying to guess the direction of the exchange rate. Instead, I will write about how to distinguish between stocks that are prone to losing money due to exchange rates and those that are less likely to.
What you will learn in this article
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The difference between stocks that are easily swayed by exchange rates and those that are not
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Specific examples of Japanese and US stocks
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How to distinguish them using three figures from financial statements and how to save time using AI
Why exchange rates cannot be predicted
The reason is simple: opposing forces are at work simultaneously.
Japan’s interest rate hike is a force for a stronger yen. But this time, the US also raised rates by the same 0.25%, so the interest rate gap between Japan and the US has hardly changed.
So what was the yen strengthening at the beginning of the month? I see the actions of the authorities as having a greater impact than interest rates. Following the coordinated US-Japan intervention at the end of July, there is suspicion of unannounced “stealth intervention.” On top of that, US Treasury Secretary Bessent made repeated remarks supporting a stronger yen. The impression is that the atmosphere making it difficult to sell the yen spread all at once because the US side clearly began saying that “the yen’s weakness has gone too far.”
On the other hand, the “flow of selling the yen,” such as payments for energy imports, overseas subscription fees, and individual overseas investments, continues unabated. Even if the yen strengthens due to interventions or remarks by officials, it returns to a weaker yen over time. I believe this tug-of-war is the true nature of the current volatility.
With so many conflicting factors, even professionals have divided views. It is certainly a losing game for office workers to try to guess it in between their work tasks.
Stocks that lose money on exchange rates
Stocks that fluctuate significantly every time the exchange rate moves are those where a large portion of sales or costs are in foreign currency.
Representative examples are export-oriented companies such as automobiles, electronic components, and machinery. When dollars earned overseas are converted into yen, profits shrink when the yen is strong. That is why they are sold on news of a stronger yen and bought back when the yen weakens. If the exchange rate swings back and forth, the stock price moves up and down each time.
There is also the reverse pattern. Companies that buy raw materials or products from overseas see their costs rise when the yen weakens. Food companies that rely on imported raw materials and retailers that sell products made overseas fall into this category. Electric and gas companies also import fuel, but since fuel costs are reflected in rates with a time lag, the impact often appears as temporary profit fluctuations.
Both can make a lot of money if you guess the direction of the exchange rate correctly. But with volatility like this, stock prices move due to exchange rates regardless of the company’s actual performance. It is common to end up with unrealized losses depending on the exchange rate, even if you hold a good company.
For Japanese stocks, these are some examples
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Toyota Motor (7203): A prime example that has significant overseas sales and explains the impact of exchange rates with every earnings report
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Murata Manufacturing (6981): Electronic components. Over 90% of sales are overseas
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Nitori Holdings (9843): This one struggles with a weak yen. Since it imports products made overseas to sell, a weak yen increases procurement costs
Look at US stocks in terms of “dollar strength/weakness”
In the case of US stocks, what affects performance is not the dollar-yen rate, but whether the dollar is strong or weak against currencies like the euro. When the dollar strengthens, revenue earned overseas decreases when converted into dollars.
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Philip Morris (PM): About 90% of sales are outside the US
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Coca-Cola (KO), McDonald’s (MCD): Both have more than half of their sales outside the US
Stocks less likely to lose due to exchange rates
Conversely, there are companies whose performance does not change much regardless of which way the exchange rate moves.
First are domestic demand companies that earn within the country. Companies like telecommunications, railways, and domestic-oriented services have almost all their sales and costs in yen. Their stock prices are less likely to be swayed by exchange rate news, making them easier to evaluate based on their actual performance.
In the current environment, bank stocks are also candidates. It is generally believed that when interest rates rise, lending margins tend to widen, making rate hikes a tailwind for this sector. However, there are also negative aspects such as rising deposit interest rates and the decline in the value of bonds held.
Another type is companies that “make locally and sell locally” overseas. Even if overseas sales are large, since sales and costs are in the same currency, profits are less volatile than for export-centered companies. For example, Nippon Paint Holdings (4612) has the majority of its sales overseas, but paint is a business where it is manufactured in factories in each country and sold in that same country. However, the impact of exchange rates when converting profits into yen remains.
It is not the case that any domestic demand stock is fine. Companies with high debt face headwinds from rate hikes. Sectors that use borrowing to conduct business, such as real estate, see interest payments increase when interest rates rise. Since “being strong against exchange rates” and “being strong against interest rates” are different things, please look at them separately.
For Japanese stocks, these are some examples
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KDDI (9433), NTT (9432): Telecommunications. The majority of sales are domestic. NTT has about 20% of its business overseas via NTT Data. Since both have large borrowings for capital investment, you should look at the impact of interest rates separately
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Mitsubishi UFJ Financial Group (8306): The largest banking group in Japan. While it is easy to benefit from rate hikes, it also has large overseas operations, so it is also affected by exchange rates, such as overseas profits increasing in yen terms when the yen is weak. It is positioned as “not as swayed by exchange rates as export stocks”
For US stocks, these are some examples
Both are types that are less susceptible to the effects of a strong or weak dollar. However, since you are buying US stocks from Japan, the valuation in yen will fluctuate depending on the dollar-yen rate. This is unavoidable as long as you hold US stocks.
The stocks mentioned here are just examples and are not recommendations to buy. Please check the latest financial results using the method I will write about next.
How to identify them: Three figures in the financial results
You can get an idea of whether the stocks you hold are prone to losses from exchange rates by looking at the following three items in the financial results.
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Overseas sales ratio: Look at the percentage of overseas sales from the regional sales breakdown. The higher it is, the more susceptible it is to exchange rate fluctuations
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Assumed exchange rate: The exchange rate the company uses as a premise for its earnings forecast. For export-oriented companies, if the current dollar-yen rate is weaker than this, it becomes a factor for an upward revision, and if it is stronger, it becomes a factor for a downward revision (the opposite is true for import-oriented companies)
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Exchange rate sensitivity: “How much operating profit decreases with a 1-yen appreciation of the yen.” Since looking only at the amount will show differences based on company size, it is easier to understand by comparing it as a percentage of operating profit. Some companies also have delayed effects due to currency hedging
It is much easier to have AI extract them
Reading financial documents one by one is tough for office workers, isn’t it? I give the PDF of the financial results briefing materials to an AI and have it extract only the necessary numbers. Here is how to ask it.
From this financial report, extract 1) the regional sales and overseas sales ratio, 2) the assumed exchange rate, and 3) the exchange rate sensitivity. For items not listed in the document, write “Not stated”.
The last part, “write ‘Not stated’,” is important. AI can sometimes create plausible-looking numbers, so please be sure to verify the extracted numbers against the original document.
Here are the results of actually trying this with three companies.
Toyota has figures for all three, showing that they are very conscious of exchange rates. Conversely, KDDI has “Not stated” for everything. This means that it is a business that does not need to worry about exchange rates in the first place. Although Nitori’s overseas sales are small, it sets an internal rate for purchasing, so it can be read as a type where a weaker yen affects costs. “Not stated” is also a piece of information in itself.
※ The figures are based on the financial documents of each company confirmed as of September 2026.
I used to do all of this myself, but now it takes much less time, and the number of stocks I can check has increased. I prioritize looking at stocks I am considering purchasing or am interested in.
How to approach it as a side-hustle investor
When exchange rates are volatile, I think the thing that office workers tend to do and should avoid most is buying and selling every time there is news about exchange rates.
If you see a headline saying ‘Yen appreciation is accelerating’ during your lunch break and sell your export stocks, by the evening, the yen has already weakened again. For a company employee who cannot watch the market all day, it is honestly impossible to keep up with these movements.
This comes from my own failures.
Before a Bank of Japan meeting, there was a leaked news report confirming a rate hike, so I predicted the yen would definitely strengthen and shorted the dollar-yen pair. During my lunch break, the rate hike was announced, and as expected, the yen strengthened. Then, at the 3:00 PM press conference by the BOJ Governor, the yen suddenly weakened again. I was pale when I checked the charts after work.
Since then, I have stopped making moves based on assumptions about the direction of exchange rates. Honestly, this recent volatility was also unexpected. While I view the medium-to-long term as leaning toward a weaker yen, I do not trade based on that bet. Because I did not have my portfolio tilted to one side, I did not need to panic.
There are only two things I am conscious of.
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Do not bias your portfolio to one side of the exchange rate. Avoid having only export stocks or only domestic demand stocks, and keep it in a shape where some part will hold up whether the yen strengthens or weakens.
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Decide the timing of purchases based on your own rules. Do not buy based on exchange rate news, but only when the conditions you decided on in advance are met. The details of these rules are summarized in the article I will introduce at the end.
First, try dividing the stocks you currently hold into those that are likely to lose money due to exchange rates and those that are less likely to lose money. If you are biased toward one or the other, that is the current weakness of your portfolio.
Just one last thing.
When the exchange rate is volatile, you naturally want to panic and trade. As a side-hustle investor for seven years, I have failed many times in situations like this.
I have summarized the trading rules I created from those failures in this article. For example, there is a rule like ‘Write down the conditions for selling before you buy.’ The rule I value most, the rule for ‘the day to buy stocks,’ was taught to me by a professional investor. This person built a large fortune as a full-time investor and now serves as the CEO of a fund overseas. They are dedicated to nurturing those who follow, and I met them through that connection.
https://note.com/cozy_oxalis3124/n/nf92ef9833096
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Note: This article introduces the author’s personal experience and thoughts and does not recommend the buying or selling of specific stocks. Exchange rate levels in the article are as of the time of writing. Please make final investment decisions at your own responsibility.