Kobe Earthquake’s Impact on the Nikkei and $/Yen

First, our thoughts and prayers are with the Japanese.   They are a great nation and a good people.  Watching this happen unfold in  real time is stunning and we are hoping for a miracle that the loss of life is limited.  We were living in and lost a house in a powerful L.A. quake and understand the fear when the earth shakes. 

Though it is too early to assess the full damage of this quake, the following chart illustrates how the January 17, 1995 Kobe Earthquake, which measured 7.3 and killed 6,434 people, impacted the Nikkei and $/Yen.   The Nikkei fell 24.6 percent before bottoming at the end of June.

The Yen actually strengthened 18 percent before the dollar hit the famous “Rubin bottom” in April 1995.   The dollar was already in downtrend and further weakened by the U.S. bailout of the Mexico when the Kobe quake hit, so it is difficult to fully extract its true impact on the exchange rate.  (click here if chart is not observable)

kobe-earthquake.jpg?w=640&h=441


Originally published at The Big Picture and reproduced here with permission.
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