Japan's Nikkei 225 stock index plunged 12.4% on August 5, 2024. According to *Japan Today*, this represents the worst fall in nearly four decades.
A worse event only occurred on October 20, 1987, when the Nikkei index plummeted 13.4%.
The Nikkei's early August fall coincided with the strengthening of the Japanese yen against the US dollar.
Based on Yahoo Finance data, on August 5, 2024, 1 yen reached US$0.0069, its highest level in seven months.
The upward trend of the yen has been ongoing since mid-July 2024, as seen in the graph.
According to Kyle Rodda, a financial market analyst from Capital.com, the yen's strengthening influenced the Nikkei's fall.
"The rapidly strengthening yen is putting downward pressure on Japanese equities, and is prompting the unwinding of large carry trades. Investors borrow money in yen to buy other assets, especially US tech stocks," said Kyle Rodda, as reported by *Reuters* (August 5, 2024).
However, Japanese Finance Minister Shunichi Suzuki holds a different view.
"It's difficult to say what's behind the stock decline," said Shunichi Suzuki, as reported by *Reuters* (August 5, 2024).