RetireJapan

Lets assume the S&P500 loses 1% after the US market closes one day.

Lets also assume The Yen falls 1% to the dollar (100cent - 81 yen -> 100cents -80 yen) during that same period.

All things being equal a TYO listed S&P500 fund lost 1% of it`s value in USD terms, but broke even in YEN terms. Is that correct?

Is why Funds and ETFs traded on the TYO sometimes seem to move slightly out of step even while factoring in settlement time and extended trading hours?

(Note: I am not worried about this, just curious. I would never by a hedged-equity fund, don`t worry).

If the Yen gets Stronger => USDJPY goes Down => Your US$ assets will be worth less Yen

If the Yen gets Weaker => USDJPY goes Up => Your US$ assets will be worth more Yen

So

Two days ago, The S&P500 VOO was at $416.32 @ USDJPY 122.562 = JPY 51,025

Today's S&P500 VOO is at $410.00 @ USDJPY 122.500 = JPY 50,225

With no movement in the USDJPY, would have been
$410.00 @ USDJPY 122.562 = JPY 51,025.42

So the Yen Strengthening has amplified the loss.


If you had a $100 asset and USDJPY 100 = JPY 10,000
If they both move 1%

S&P Down and Yen Stronger (USDJPY Down)
$99 x USDJPY 99 = JPY 9,801

S&P Up and Yen Weaker (USDJPY Up)
$101 x USDJPY 101 = JPY 10,201

S&P Up and Yen Stronger (USDJPY Down)
$101 x USDJPY 99 = JPY 9,999

S&P Down and Yen Weaker (USDJPY Up)
$99 x USDJPY 101 = JPY 9,999


If you want to buy Dollar Assets, you want the Yen to Strengthen (USDJPY to go Down) so you get more Dollars for your Yen

If you want to value or sell Dollar Assets you own, you want the Yen to Weaken (USDJPY Up) so that you get more Yen for your Dollars.

Right now we are at the Weak extreme of the range of USDJPY over the last 15 years (close to the max 125.5), so if the Yen Strengthens (USDJPY goes Down) from here it will erode the Yen value of your USD Assets.