Japan Inc. Urges Calmer Currency Markets as Weak Yen Strains Economy
Japanese business leaders call for currency stability as a weak yen boosts exporters but drives up import costs and economic uncertainty.
Japanese executives are stepping up calls for greater currency stability, warning that a persistently weak yen and sharp exchange-rate swings are creating fresh risks for the country's economy. The concerns come just weeks after Tokyo and Washington intervened jointly to support the yen, which had tumbled to a 40-year low near 164 to the dollar in July.
The intervention helped lift the yen by roughly 5%, but business leaders say the underlying strain remains. While a cheaper yen inflates the value of overseas earnings for exporters, it also raises the cost of energy, raw materials, and food imports — a burden that falls heavily on Japan's import-dependent economy.
"A weak yen does not necessarily mean all is well," said Kenichiro Fujimoto, chief financial officer of Mitsubishi Electric, in a recent interview. He noted that problems affecting the broader economy inevitably reach individual companies.
Norihiko Ishiguro, chairman of the Japan External Trade Organization (JETRO), made a similar point at a July press conference. "Japanese companies import almost all their raw materials," he said, adding that beyond a certain exchange rate, costs actually increase, so exporters do not always benefit from a weak yen.
Currency volatility is also complicating corporate planning. Makoto Tanaka, CFO of trading house Mitsui & Co, which posted record first-quarter earnings this week thanks to the weak yen, said he would prioritise market stability over further gains. "More than anything I'd like the market to stabilise and volatility to come down," he said.
His counterpart at rival Mitsubishi Corp, Yoshihiro Shimazu, said the firm is "really feeling the impact of very high volatility" and will revise its assumed rate of 150 yen to the dollar as needed.
A JETRO survey published in March found that nearly a fifth of companies viewed a rate of 120–124 yen to the dollar as most desirable, while only 11% preferred a rate above 150 yen. However, some executives doubt the yen will return to those stronger levels anytime soon.
"Considering Japan's fundamentals and that the trade balance isn't recovering, perhaps we won't see a rate of 120 to 130 yen to the dollar again," Fujimoto said.