U.S.-traded shares of Toyota Motor (TM 1.09%) were lower on Monday after the fast-rising yen triggered a big sell-off in the Tokyo markets. Toyota's Tokyo-traded shares closed down 13.7% on Monday.
The automaker's American depositary shares were down as much as 7.7% in early trading on Monday but had recovered somewhat by early afternoon. Shares were down 2.4% as of 1 p.m. ET today.
The Prius is one of several Toyota models caught up in a crash-testing scandal in Japan, but Monday's stock move was more about exchange rates. Image source: Toyota Motor.
A big surge for the yen led to a swoon for Toyota stock
Toyota does business all over the world, but it reports its revenue and profits in its home currency, the Japanese yen. Exchange rates have always been a factor in Toyota's share price.
The yen has surged in value in recent days, following a rate hike by Japan's central bank on July 31. As of Monday morning, the yen was trading at about 143 to the U.S. dollar, a major shift from 162 yen to the dollar just a month ago.
The story is similar for the yen versus the euro. A month ago, one euro bought about 174 yen; on Monday morning, it bought only about 157.
The stronger yen means that the dollars and euros that Toyota earns outside of Japan are now worth less in yen terms than they were a month ago. That's why the stock sold off early on Monday.
The rising yen isn't Toyota's only challenge now
Exchange rates aren't the only factor that has put pressure on Toyota's stock over the last week. Shares fell after a decent earnings report last week due to slowing auto sales in the U.S. and China, and on concerns over a crash-testing scandal that led Japanese regulators to suspend sales of several Toyota models in its home market.
But the yen's surge isn't helping, and Toyota shareholders have to be hoping that it settles down soon.
