yen plunge hurting but more still to come
Tuesday 18 February 2025
Last Updated : GMT 06:49:16
Arab Today, arab today

Yen plunge hurting, but more still to come

Arab Today, arab today

Arab Today, arab today Yen plunge hurting, but more still to come

Three years after hitting 75 yen to the dollar
Tokyo - AFP

The precipitous plunge in the value of the yen in the past 18 months is an object lesson in being careful what you wish for.
After years of complaints by economic managers that the yen was too high and no one was buying Japanese exports, the currency is on a one-way charge to the bottom of the heap.
Three years after hitting the dizzy heights of 75 yen to the dollar as global investors poured into the safe haven currency, the Japanese unit is now plumbing seven-year lows beyond 120 to the dollar.
Massive -- and recently expanded -- monetary easing by the Bank of Japan has been responsible for driving down the yen, a trend that has accelerated in recent months as the Fed wound down its asset-purchase programme.
The price of Japanese goods abroad has fallen and exporting firms have seen their bottom line fattening nicely, driving up share prices.
Companies such as Toyota and Panasonic have celebrated as their coffers fill with cash, enough -- maybe -- to dish out the pay rises Prime Minister Shinzo Abe desperately wants workers to get if they are ever to start spending and help nurture the economy back to health.
With the dollar at 120 yen, compared with 103 a year ago, the main six automakers stand to collectively enjoy an additional 800 billion yen ($6.7 billion) in operating profit for the year to March 2015, the Nikkei newspaper estimated.
And businesses catering to foreign tourists are seeing a boom, with the cheap yen encouraging an ever-greater number of high-spending foreigners to splash the cash.
- Corporate bankruptcies -
But the rocketing price of imports such as energy, food and raw materials have put the squeeze on consumers and businesses at home.
Where Tokyo was accustomed to making soothing noises to hard-hit exporters, it now finds itself drafting measures to combat high fuel prices that have hit truck drivers and fishermen.
The number of yen-linked corporate bankruptcies nearly tripled to 301 in the 11 months through November, according to Teikoku Databank, a corporate credit research firm.
"Further yen depreciation could do lethal damage to mid-sized and small companies which are barely surviving," the report warned.
Among those that have succumbed is now-bankrupt bag maker Fukai, among a number of firms that struggled to pass on the extra costs to customers, which came as the sales tax rose from 5.0 percent to 8.0 percent in April, hammering consumer spending.
"In addition to losses in currency derivatives due to past strengthening of the yen... increased costs in imports due to a cheaper yen since the end of 2012 worsened its profitability rapidly," the Teikoku report said of the bag maker.
For struggling companies and hard-pressed consumers, it seems worse is yet to come.
Abe's Liberal Democratic Party is widely expected to bag an easy victory in this weekend's general election, meaning more of the same.
The US economic recovery should also fuel dollar-buying, economists said.
There is one factor cushioning Japan from the full brunt of the plunging yen -- cheap oil.
Crude has struck fresh five-year lows, with US benchmark West Texas Intermediate for January delivery around $63 a barrel and analysts forecasting further falls owing to weak demand, a global supply glut and fewer production halts.
Even with its ever-larger need to import dollar-denominated fossil fuels -- a legacy of the nuclear shutdown in post-Fukushima Japan -- things are not as bad as they could be.
The impact of cheap oil on the economy at large is similar to a tax cut in Japan for now, said Ryutaro Kono, economist at BNP Paribas.
But -- frustratingly for Abe -- that is taking the wind out of price rises and putting his target of 2.0 percent inflation further beyond reach.
That, in turn, might lead the Bank of Japan to further extend its easing programme, which could further drive down the yen, Kono added.
If that happens "we will never enjoy the benefits of falling oil prices", said Kono.

 

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

yen plunge hurting but more still to come yen plunge hurting but more still to come

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

yen plunge hurting but more still to come yen plunge hurting but more still to come

 



GMT 15:06 2017 Wednesday ,23 August

DGSN: More than 28,000 People Arrested in August

GMT 23:31 2018 Friday ,05 January

King receives Premier, Crown Prince

GMT 03:03 2017 Saturday ,10 June

May22nd-June21st

GMT 12:38 2013 Thursday ,25 July

Beauty and history of Al-Muwahideen mosque

GMT 06:56 2017 Wednesday ,20 September

Western powers warn Suu Kyi on Rohingya before speech

GMT 17:07 2017 Thursday ,29 June

Souq Okaz to introduce ‘Narrator’s Tent’

GMT 07:06 2017 Tuesday ,29 August

Israeli navy targets fishermen boats in Gaza waters

GMT 14:03 2016 Tuesday ,23 August

Turkmen president blasts sports chief

GMT 15:41 2017 Monday ,09 October

Poland head to World Cup, perfection for Germany
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday