Word: yen
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...interest rates 0.75 of a percentage point to try to keep America from slipping into recession. But in Japan, there's little central bank activity, despite the threat of recession, a sliding stock market, and the decline of the dollar to its lowest level against the yen in 13 years. "At this moment the situation is very bad and it will take time to settle a normal relationship between the LDP and the DPJ," says Iio, a professor of government. "The situation is critical for Prime Minister Fukuda...
...kind of appreciation the yen is experiencing now isn't necessarily a bad thing, says Takashi Omori, chief economist for Japan at UBS. He points to the fact that about 80% of Japanese imports are contracted on foreign currency and this would allow for savings on import costs with an appreciating yen and make up for some losses expected in export sales. He says that some Japanese firms have accumulated profits in the past years and can now be expected to live off of this while the yen stabilizes. If you take into account exchange rate and inflation, the current...
Economists are quick to point out that a weak dollar doesn't necessarily mean a strong yen. The exchange rate of the yen to other currencies - such as the euro - still shows depreciation. But the dollar-yen pair heavily weights consumer sentiment and the stock market, says Takahide Kiuchi, chief economist at Nomura Securities, and the rate right now has an overall negative affect...
...weak dollar dumps cold water on some of Japan's largest corporations and exporters, since a higher yen value makes exports from the likes of Sony and Sharp to Toyota and Honda less competitive. On Thursday, Toyota Motor Corp. president Katsuaki Watanabe said that his company will need to maintain profit growth, since it forecast record profit for this fiscal year when the dollar was about 113 yen. For every yen the dollar drops, Toyota's operating profit falls...
...Royal Bank of Scotland. "Intervention may work to buy time, but it's not a fundamental solution. The authorities in Japan know this and they're hesitant to act." Finance Minister Fukushiro Nukaga did say this week that "excessive exchange rate moves are undesirable." But, in relative terms, the yen is not as weak as it was in 2004, when the government last intervened. Central bankers in Japan believe a rate of 100 yen to the dollar is not excessive appreciation but rather a form of normalization and adjustment. However, though the continuing weakness of the dollar stems from America...