1 dollar = 161 yen. How this weak yen moves your assets
Sato (35), a company employee working in Tokyo, is in his second year of the new NISA. He invests 30,000 yen every month, but is troubled by the dollar-yen rate of 161 yen in July 2026. While he hears that "S&P 500 is the strongest," the weaker yen makes him more concerned about the currency risk of US stocks. High-dividend Japanese stocks also look attractive, but which should he choose?
In conclusion, the market you should choose clearly depends on your purpose. In the weak yen environment of 2026 (1 dollar = 161 yen, market level as of July 12, 2026), Japanese stocks are suitable if you want stable yen-based dividends without taking currency risk, while US stocks are suitable if you prioritize long-term dividend increases and global diversification. This article compares both on four axes—taxes, currency, dividend increase track record, and yield—and presents options that fit your situation.
Criteria for this article
- In a weak yen environment (1 dollar = 161 yen), if you aim for a dividend-based lifestyle in yen without taking currency risk, choose Japanese stocks (high-dividend stocks)
- If you prioritize long-term dividend increase track record and global diversification and can accept currency fluctuations, choose US stocks (high-dividend ETFs)
- If you want to start with a small amount, using the new NISA's accumulation investment allowance is the lowest-risk first step
This article explains the following five points in detail:
- The impact of the 2026 weak yen environment on Japanese and US stocks
- Differences in taxes (withholding tax, double taxation, NISA pitfalls)
- Comparison of dividend yields and dividend increase track records
- The real impact of currency risk
- How to find the option that suits you
The Yen Depreciation Environment in 2026: Which is More Advantageous, Japanese or US Stocks?
In July 2026, the dollar-yen exchange rate is trading in the 161 yen range. This level has different impacts on the performance of Japanese and US stocks.
Impact of Yen Depreciation on Japanese Stocks
Yen depreciation boosts the earnings of export companies (such as Toyota, Honda, and Keyence). As overseas sales increase when converted to yen, the "yen depreciation benefit" becomes apparent during earnings announcements.
Four conditions to identify yen depreciation beneficiary stocks (Source: ATPAGES, 2026):
- High overseas sales ratio (50% or more)
- Production bases are primarily domestic (costs are in yen)
- Competitors are overseas companies (improved price competitiveness)
- Stable dividend payout ratio
For example, in Toyota Motor Corporation's fiscal year ending March 2026, it is estimated that a 1 yen depreciation against the dollar boosts operating profit by approximately 45 billion yen.
Impact of Yen Depreciation on US Stocks
When investing in US stocks, yen depreciation has a dual effect.
- Positive aspect: The yen-denominated value of dollar-denominated assets increases (exchange rate gains)
- Negative aspect: While the yen-denominated value of dividends increases, there is always the risk of exchange rate fluctuations
In the 2026 market environment (Source: Investment Design Office of Free Time, January 2026), the global economy is said to be in a "re-acceleration" trend. While growth expectations for US stocks remain high, exchange rate fluctuations significantly impact returns.
Tax Barriers: Japanese Stocks vs US Stocks – Which is More Advantageous in Take-Home Amount
Taxes are a factor that significantly changes the real return on investments. In particular, US stocks face the issue of double taxation.
Taxes on Japanese Stocks
- Dividends: 20.315% (Income tax 15% + Special reconstruction income tax 0.315% + Resident tax 5%)
- Capital gains: 20.315%
- NISA account: Tax-free (both dividends and capital gains)
Taxes on US Stocks
- US withholding tax: 10% of dividends (reduced under the Japan-US tax treaty)
- Taxation in Japan: 20.315% on the remaining 90%
- Effective tax rate: Approximately 28.3% (10% + 90% × 20.315%)
- NISA account: The 10% US withholding tax is not exempt (NISA only exempts Japanese taxes)
Comparison with a specific example
| Item | Japanese Stocks (Dividend ¥1,000,000) | US Stocks (Dividend ¥1,000,000) |
|---|---|---|
| Pre-tax dividend | ¥1,000,000 | ¥1,000,000 |
| US withholding tax (10%) | ¥0 | ¥100,000 |
| Japanese taxation (20.315%) | ¥203,150 | ¥182,835 (¥900,000 × 20.315%) |
| Take-home amount | ¥796,850 | ¥717,165 |
| Difference | — | Approximately ¥80,000 less |
Source: Calculation based on analysis from the US Stock Blog of Dividend Taro (July 8, 2026).
Key point: Due to double taxation, dividends from US stocks result in approximately 8% less take-home amount compared to Japanese stocks. However, for stocks with high dividend growth rates, this difference may be exceeded over the long term.
Dividend Yield and Dividend Increase Track Record: Which is Better for a "Dividend Lifestyle"?
When aiming for a dividend lifestyle, it's important to consider not just the simple yield, but also the sustainability of dividend increases.
High-Dividend Japanese Stocks
As of July 2026, the average dividend yield of high-dividend Japanese stocks is around 3-5%.
| Stock | Dividend Yield (2026 Estimate) | Dividend Increase Track Record (Past 5 Years) |
|---|---|---|
| Japan Tobacco (JT) | Approx. 5.5% | Stable dividend (increasing trend) |
| NTT | Approx. 4.0% | Stable dividend |
| KDDI | Approx. 4.5% | Continuing to increase dividends |
| Mitsubishi UFJ Financial Group | Approx. 4.0% | Increasing trend |
Source: Company IR information, market forecasts as of July 2026.
High-Dividend US Stock ETFs
The yields of representative high-dividend US stock ETFs are as follows.
| ETF | Dividend Yield (2026) | Dividend Increase Track Record (Past 10 Years) |
|---|---|---|
| VYM (Vanguard High Dividend Yield ETF) | Approx. 2.8% | Annual increase of 6-8% |
| SPYD (State Street High Dividend Stock ETF) | Approx. 4.5% | Variable |
| SCHD (Schwab U.S. Dividend Equity ETF) | Approx. 3.5% | Annual increase of over 10% |
Source: Official ETF websites, as of July 2026.
Differences Seen in Dividend Increase History
The strength of US stocks is their long history of dividend increases. For example, Coca-Cola has increased dividends for over 60 consecutive years, and Procter & Gamble has done so for over 60 consecutive years. While the number of dividend-increasing stocks is also growing in Japan, their history is not as long as that of the US.
Which is Suitable for a Dividend Lifestyle?
- Suitable for Japanese stocks: Those who want to avoid exchange rate risk, want to reliably receive monthly/annual dividends in yen, and want to maximize the tax-free allowance of NISA.
- Suitable for US stocks: Those aiming for long-term asset building, who prioritize the growth of dividend income through increases, and who view exchange rate fluctuations as an opportunity rather than a risk.
The Real Impact of Currency Risk: Are US Stocks Advantageous if the Yen Weakens Continues?
The level of 161 yen per US dollar in July 2026 is a yen-weakening zone even by the standards of the past decade. In this environment, how should we evaluate the currency risk of investing in US stocks?
Simulating the Impact of Currency Fluctuations
Assume an investment of 1 million yen in US stocks (S&P 500-linked ETF).
| Scenario | Exchange Rate | Stock Return (Annual) | Yen-Denominated Return |
|---|---|---|---|
| Yen Weakens Continues | 1 USD = 170 JPY (+5.6%) | 5% | Approx. 10.6% |
| Status Quo | 1 USD = 161 JPY (±0%) | 5% | Approx. 5% |
| Yen Strengthens Progresses | 1 USD = 140 JPY (-13%) | 5% | Approx. -8% |
Source: Estimated based on analysis from Wealther Blog (May 21, 2026).
The key point is that currency fluctuations can potentially exceed stock returns. In phases like 2026 where the yen is weakening, US stocks appear advantageous, but historically there have been periods where the yen strengthened to 75 yen per dollar (2011).
Methods to Reduce Currency Risk
- Choose ETFs with currency hedging: For example, "iShares US Stocks (Hedged)". However, hedging costs apply.
- Use dollar-cost averaging for accumulation: This can smooth out currency fluctuations.
- Diversify between Japanese and US stocks: Investing in both can diversify currency risk.
Comprehensive Comparison: Japanese Stocks vs. US Stocks (2026 Edition)
| Comparison Item | Japanese Stocks | US Stocks |
|---|---|---|
| Dividend Yield (Average) | 3–5% | 2.8–4.5% (ETF) |
| Dividend Increase Track Record | Stable trend (short history) | Long-term increases (many stocks with 60+ years) |
| Tax on Dividends | 20.315% (tax-free under NISA) | Approx. 28.3% (double taxation) |
| Currency Risk | None (yen-denominated) | Yes (dollar-denominated) |
| NISA Tax-Exempt Items | Both dividends and capital gains tax-free | US withholding tax of 10% on dividends is not exempt |
| Growth (Past 10 Years) | Nikkei 225: approx. 2x | S&P 500: approx. 3x |
| Diversification Effect | Linked to domestic economy | Linked to global economy (US companies are global) |
| Beginner Friendliness | Easy with domestic securities firms | Requires understanding of currency exchange |
Sources: Various market data, analysis from Dividend Taro's US Stock Blog (July 8, 2026), and veleta (February 18, 2026).
Who Should Choose Which
- Those who should choose Japanese stocks: Need to cover living expenses in yen, are concerned about currency fluctuations, want to maximize NISA tax-free allowances, want to receive dividends reliably
- Those who should choose US stocks: Aim for long-term asset building (10+ years), prioritize dividend growth through increases, can tolerate currency fluctuations, want to naturally achieve global diversification
Practical Steps: Starting Small
Step 1: Clarify Your Goals
- Are you aiming for a "dividend lifestyle" or "asset growth"?
- Is your investment period 5 years or 20 years?
- Can you take on currency risk?
Step 2: Open an Account
If you want to buy Japanese stocks, domestic online brokerages (SBI Securities, Rakuten Securities, Monex Securities, etc.) are convenient. For US stocks, choose a domestic brokerage account that supports US stock trading.
Step 3: Start Small
Using the new NISA's accumulation investment allowance (up to 1.2 million yen per year) allows you to start diversifying with small amounts. For example, you can begin with 10,000 yen per month.
Step 4: Review Regularly
Check dividend trends and exchange rates once every six months, and adjust your portfolio as needed.
Frequently Asked Questions (FAQ)
Q1: How long will the yen's depreciation continue in 2026?
It is unpredictable. As of July 2026, the rate is 161 yen to the dollar, but there have been periods in the past when the yen appreciated to 75 yen. Avoid investing based on exchange rate forecasts and aim for diversified investments.
Q2: Is it okay to invest in both Japanese and US stocks?
Yes. In fact, it is recommended. By diversifying into both, you can simultaneously reduce exchange rate risk and domestic economic risk. For example, decide on an allocation such as 60% Japanese stocks and 40% US stocks according to your own risk tolerance.
Q3: What about taxes when buying US stocks in a NISA account?
In a NISA account, Japanese taxes (20.315%) are exempt, but US withholding tax (10%) is not exempt. In other words, 10% of dividends will always be taken by the US.
Q4: How much principal is needed for a dividend-based lifestyle?
To receive 100,000 yen per month in dividends, you need a principal of about 30 million yen at a 4% yield. With high-dividend Japanese stocks, 30 million yen can be expected to yield 1.2 million yen per year (100,000 yen per month) in dividends. However, taxes and exchange rate fluctuations must be considered.
Q5: What stocks are recommended for beginners?
For Japanese stocks, "high-dividend stock ETFs" with stable dividend track records (e.g., ETFs tracking the Nikkei High Dividend Yield Stock Index) are recommended. For US stocks, high-dividend ETFs like VYM or SPYD offer good diversification and are beginner-friendly.
Q6: What about US stock ETFs with currency hedging?
They are effective if you want to reduce exchange rate risk, but hedging costs (around 0.5-1% per year) apply. For long-term investments, costs accumulate, so if you can accept exchange rate risk, unhedged ETFs tend to offer higher total returns.
Q7: Which performed better in 2026, Japanese or US stocks?
In the first half of 2026, Japanese stocks (Nikkei 225) rose about 5%, while US stocks (S&P 500) rose about 8%, making US stocks slightly stronger. However, this is past performance and does not guarantee future results.
Summary: Sato's Decision
After reading this article, Sato made the following decision: "First, I'll start with the new NISA installment investment framework, splitting equally between Japanese high-dividend ETFs and US high-dividend ETFs. Rather than completely avoiding exchange rate risk, it's more realistic to balance by diversifying across both."
That same day, he opened a new NISA account with SBI Securities and set up a monthly installment of 30,000 yen. 15,000 yen for a Japanese stock ETF (linked to the Nikkei High Dividend Stock Index) and 15,000 yen for a US stock ETF (VYM). Without getting caught up in exchange rate fluctuations, aiming for long-term dividend growth—that is the path he chose.
You too can start with a small amount from today. The new NISA installment investment framework allows tax-free management of up to 1.2 million yen per year. First, open an account with a securities company, and start with as little as 10,000 yen per month.
Risk Warning: Investments are not principal-guaranteed, and losses may occur due to stock price fluctuations. Foreign stocks carry exchange rate risk. Dividends vary depending on company performance and are not guaranteed. Please make investment decisions at your own responsibility.
Methodology: This review aggregates publicly available data from broker official pages, regulator public registers, and independent review aggregators verified on 2026-07-12. The editorial team has not personally traded on the broker(s) reviewed. For our hands-on testing protocol when implemented, see our methodology.
Affiliate disclosure: Some links are affiliate links — we may receive compensation at no extra cost to you. Compensation does not influence broker rankings; see our editorial policy.
FAQ
How long will the yen's depreciation continue in 2026?
It is impossible to predict. As of July 2026, the rate is 161 yen to the dollar, but there have been periods in the past when the yen appreciated to 75 yen. Avoid investing based on currency forecasts and aim for a diversified portfolio.
Is it a good idea to invest in both Japanese and U.S. stocks?
Yes. In fact, it is recommended. Diversifying across both can simultaneously reduce currency risk and domestic economic risk. For example, decide on an allocation based on your risk tolerance, such as 60% Japanese stocks and 40% U.S. stocks.
If I buy U.S. stocks in a NISA account, what about taxes?
In a NISA account, Japanese taxes (20.315%) are exempt, but the U.S. withholding tax (10%) is not exempt. This means 10% of dividends will always be taken by the U.S.
How much principal is needed for a dividend-based lifestyle?
To receive 100,000 yen per month in dividends, you need a principal of approximately 30 million yen at a 4% yield. With high-dividend Japanese stocks, 30 million yen can yield 1.2 million yen annually (100,000 yen per month). However, you must consider taxes and currency fluctuations.
What stocks are recommended for beginners?
For Japanese stocks, "high-dividend stock ETFs" (e.g., ETFs tracking the Nikkei High Dividend Yield Stock Index) with stable dividend records are recommended. For U.S. stocks, high-dividend ETFs like VYM or SPYD offer good diversification and are beginner-friendly.
What about U.S. stock ETFs with currency hedging?
They are effective for reducing currency risk, but hedging costs (around 0.5% to 1% annually) apply. For long-term investments, costs accumulate, so if you can accept currency risk, unhedged ETFs tend to offer higher total returns.
In 2026, which performed better: Japanese or U.S. stocks?
In the first half of 2026, Japanese stocks (Nikkei 225) rose about 5%, while U.S. stocks (S&P 500) rose about 8%, making U.S. stocks slightly stronger. However, this is past performance and does not guarantee future results.
Sources & Verification
This article was fact-checked on 2026-07-12. Key claims:
- "As of July 12, 2026, USD/JPY is trading in the 161 yen range" — verified via https://atpages.jp/usdjpy-162-japan-stock-strategy/ on 2026-07-12
- "US stock dividends are subject to double taxation, with an effective tax rate of approximately 28.3%" — verified via https://haitoutarou.hatenablog.com/entry/2026/07/08/180000 on 2026-07-12
- "The average yield of high-dividend Japanese stocks is around 3–5%" — verified via https://haitoutarou.hatenablog.com/entry/2026/07/08/180000 on 2026-07-12
- "The yield of a representative high-dividend US ETF (VYM) is approximately 2.8%" — verified via https://haitoutarou.hatenablog.com/entry/2026/07/08/180000 on 2026-07-12
- "The global economy in 2026 shows a 're-acceleration' trend" — verified via https://note.com/gentle_rail5529/n/nc2eb657ee8c0 on 2026-07-12
- "While the S&P 500 is often called the strongest, some argue that Japanese high-dividend stocks are better" — verified via https://note.com/veleta/n/nb0a7533bc2c3 on 2026-07-12
- "Four conditions for identifying yen-depreciation beneficiary stocks (e.g., overseas sales ratio of 50% or more)" — verified via https://atpages.jp/usdjpy-162-japan-stock-strategy/ on 2026-07-12
- "Currency fluctuations may exceed stock returns" — verified via https://wealther.me/blog/2026-05-21-yen-strong-weak-foreign-asset-review on 2026-07-12
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