Formula & Calculation Mechanism
Spot Rate of US Dollar to Japanese Yen
Investors borrow cheap Yen at near-zero rates to invest in high-yielding USD assets. Rapid Yen appreciation forces forced liquidation of leverage.
Market Impact on US Equities & S&P 500
Sharp USD/JPY drops (Yen strengthening) trigger global equity unwinds and spikes in VIX volatility.
Historical Precedents & Bull/Bear Regimes
On August 5, 2024, a rapid 10-yen drop in USD/JPY triggered the famous global market crash and VIX spike to 65.