The Japanese yen’s recent rise has been quite amazing.

In May, a dollar bought 95 yen. Today, it buys only around 85 yen because of the strength that the yen has gained.

Currency traders have absolutely loved it. They’ve been able to ride the yen up. After all, this has been one of the few very distinct uptrends out there lately in most any market. So, the trend hunters have really latched on to this one and have enjoyed the ride.

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But the same cannot be said for Japanese stock investors or anyone that invests in Japanese stocks for that matter. A rising yen is a pain in their side.

You see, while most countries prefer a stronger currency, Japan actually flourishes better overall with a weaker currency.

Why?

Many of their biggest companies are exporters. They are household names that you’d know here in America like Sony, Nissan, Panasonic, Toyota, etc.

In fact, if you invest in any of these same stocks that are also traded here in the United States, you may want to get familiar with the general trend of the yen because it has a lot to do with how profitable these Japanese exporters will be.

If the yen is high, then their exports appear to be expensive.

However, if their yen is low, then their goods appear cheap and more people buy their products. So one very huge element in the profitability of these companies depends upon what the yen is doing.

Therefore, it is to your advantage as a stock trader or stock investor to know what’s going on in the currency world because it will give you an edge in the stock world.

Know whether the country that you’re investing in benefits from a stronger currency overall or a weaker one. Then watch what’s going on with that country to see if the currency is working against progress being made in the economy or if the currency is actually giving the economy a “wind to its back.”

This is one big, macro tool that you can use that will tell you a lot about an economy even before you see how their earnings season turns out or before you see what their GDP readings are like, etc.

So even if you’re exclusively a stock trader or stock investor — don’t forget the added edge that watching a country’s currency can bring.

About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of Money Matrix Insider. Discover more by Clicking Here Now.