Nikkei, also known as Nikkei 225 is a Japanese index that brings together 225 lists of major companies in the country of the rising sun.
This index is the focus of investors to measure the stock market and the current performance of the Japanese economy.
However, if observed, the Nikkei 225 index often shows a movement in a different direction compared to the Yen currency.
In an environment where the stock market is in a bad situation, the demand for the Yen currency will increase because the Yen is considered a safe haven currency.
At this time the demand for stocks such as Nikkei will decrease because the market is risky and unstable which can increase the risk of investors to lose.
On the other hand, if the market is in a good condition, Nikkei shares will be in high demand because they are able to provide good returns to investors.
At this time the response to the Yen currency will decrease again.
Additionally, a weaker Yen will give Japanese exports an advantage globally as cheaper export prices will attract more buyers.
Next, the high demand for Japanese exports can benefit the companies that are on the list of the Japanese index while also increasing the value of the Nikkei index itself.
Therefore, changes in the current market sentiment will also change the attraction of investors either towards the stock market or currency.
