Japanese Earthquake Impact: How to Play the Post-Disaster Currency Moves

According to Biriniyi Associates, investors threw more than $1 billion into Japanese exchange-traded funds (ETFs) last month - second only to U.S. energy funds and more than agriculture, large-caps and mid-cap stocks combined. They couldn't have placed their bets at a worse time. Amidst fears of multiple nuclear meltdowns, the benchmark Nikkei 225 Index plunged 10.55% yesterday (Tuesday) after a 6.2% decline on Monday - a two-day decline of 17% since Friday's devastating 9.0-level earthquake and tsunami. More than $650 billion in shareholder wealth has been vaporized. As a veteran trader and longtime expert on Asia, it's a story that I've heard countless times: Japan was supposed to regain what it once had - a vibrant economy that helped lead the world in the years following World War II, and that finally achieved global dominance in the late 1980s. Somehow, however, that never happened. But it didn't discourage the believers. To understand how to protect yourself from the looming currency backlash, please read on...