Persistent yen strength could continue to weigh on Japanese equities. For instance, electronic parts maker Murata Manufacturing Co. lost 13% following its projects for a dip in earnings in the fiscal year, citing a stronger currency, lower product selling prices, increased fixed costs and higher R&D expenses.

Related: Currency Hedged ETFs Offer a Smoother Long-Term Ride

More money managers are growing pessimistic over Japan’s outlook. For instance, BlackRock is among firms ending their bullish call on Japan – the money manager also downgraded its outlook on Japan from overweight to neutral, citing the stronger yen’s risk to export industry’s earnings and increased volatility.

Investing in the forex market helps investors diversify and hedge with currencies, which may reduce portfolio risk while maintaining an upside potential. For instance, individuals holding assets denominated in a foreign currency are exposed to currency risks – if the foreign currency weakens compared to the U.S. dollar, the investor’s foreign investments will also depreciate in value once converted back to U.S. dollars.

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CurrencyShares Japanese Yen Trust