Saturday, July 30, 2011

Strong yen hits exporters hard but benefits consumers: Japan

The high value of the yen, which has been pushed higher over the past weeks as the European Union and the United States try to stave off full-blown financial disasters, is hitting Japan's exporters hard.

The U.S. greenback recently fell to 77 yen -- a serious drop from the around 80 yen it cost to buy a dollar on July 1 -- putting the squeeze on Japan's core export-oriented businesses already reeling from the effects of March 11's Great East Japan Earthquake and tsunami.

The Japanese auto industry, for example, is still trying to rebuild damage to its supply chain, and recover from a decline in output and sluggish sales caused by the disaster. The yen's ongoing appreciation is another major blow to the industry, as it will bump up the sticker prices of Japanese cars in foreign markets, harming sales, and slice into profits due to exchange rate fluctuations.

"Both the long-term and the sudden appreciation of the yen is not at the kind of level individual companies can overcome on their own," Joji Tagawa, corporate vice president of Nissan Motor Co., said July 27 during the release of the automaker's latest earnings report. (more)