Rakuten Securities
楽天証券Brokerage (NISA/iDeCo) · Rakuten Securities
- Fees
- Varies
- English
- Partial
A leading low-cost brokerage for NISA and index-fund investing, integrated with Rakuten points and Rakuten Bank.
The yen and currency risk
How foreign assets move with both their price and the exchange rate in yen terms, and how a weak or strong yen changes your returns.
Direct answers
A foreign asset held by a yen investor moves with both its own price and the yen exchange rate: a weaker yen lifts the yen value of foreign holdings, a stronger yen lowers it — so global funds carry currency risk on top of market risk.
Key points
- Yen return on a foreign asset = asset price change combined with exchange-rate change.
- A weaker yen raises the yen value of unhedged foreign assets; a stronger yen reduces it.
- A yen-listed ETF can still carry underlying foreign-currency exposure.
- Currency diversification can be a feature (spreading beyond the yen), not only a risk.
- FX spreads on conversions and unhedged funds are a real, recurring cost to check.
Two forces move a foreign asset
When a yen-based investor owns a foreign asset — say a US stock fund — the yen value depends on two things: how the asset performs in its own currency, and how the yen moves against that currency. Both can push the same way or offset each other. A US fund could rise in dollars while a strengthening yen erases the gain in yen terms, or a weak yen could add to a dollar gain.
This is why "unhedged" global funds are described as giving exposure to foreign assets plus exchange-rate movement. It is not a flaw — it is simply an extra source of return and risk you should understand before buying.
Weak-yen and strong-yen scenarios
Consider a foreign holding worth the equivalent of ¥1,000,000. If the asset price is flat but the yen weakens 10% against that currency, the yen value rises to about ¥1,100,000; if the yen strengthens 10%, it falls to about ¥900,000 — all before any change in the asset itself. Over the past several years a notably weak yen flattered the yen returns of unhedged foreign funds; a future reversal would work the other way.
A subtle but common confusion: a fund or ETF that trades in yen on a Japanese exchange can still hold foreign-currency assets underneath. Trading currency is not the same as underlying economic currency exposure — check what the fund actually holds, not just how it is quoted.
Managing currency exposure and cost
You have choices. Holding unhedged global assets gives currency diversification, which many long-horizon equity investors deliberately keep so their wealth is not tied only to the yen. A currency-hedged fund reduces exchange-rate movement but adds cost. Some investors match currency to future spending: if you will retire and spend in yen, a yen tilt or partial hedging can reduce mismatch.
Whatever you choose, count the costs. Converting yen to a foreign currency incurs an FX spread, and unhedged funds pass currency swings straight through. Compare a broker’s advertised conversion terms and a fund’s hedging policy before assuming "zero-commission" means "zero cost."
Who this is for
- Investors buying global or US funds from Japan
- Anyone planning to spend in yen later
What this is not
- People needing a currency forecast
- Readers seeking specific fund picks
Important cautions
- Exchange rates are unpredictable. Do not assume the recent trend continues in either direction.
Related products & services
SBI Securities
SBI証券Brokerage (NISA/iDeCo) · SBI Securities
- Fees
- Varies
- English
- Partial
Japan’s largest online brokerage by accounts, with a very broad low-cost fund lineup and full NISA/iDeCo support.
Monex Securities
マネックス証券Brokerage (NISA/iDeCo) · Monex
- Fees
- Varies
- English
- Partial
An established online brokerage often chosen for US-stock access and research tools, with NISA and iDeCo support.
Frequently asked questions
What should a beginner invest in inside NISA?
This is education, not a recommendation. Most beginners research low-cost, broadly diversified index funds — for example all-country (全世界株式) or S&P 500 trackers — rather than picking individual stocks, because low fees and diversification are within your control while returns are not. Understand that values fall as well as rise, match the risk to your time horizon, and never invest money you may need soon.