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0 sats \ 0 replies \ @Bell_curve 28 Jun \ parent \ on: Japan Fires Its Top Currency Diplomat As Yen Disintegrates econ
Japanese businesses have several key concerns about the weak yen:
  1. Increased costs of imports: The weak yen makes imported raw materials, parts, and finished goods more expensive, squeezing profit margins. This is a particular challenge for companies that rely heavily on imports[1][3][5].
  2. Difficulty passing on higher costs: Many firms are struggling to pass on the higher costs to consumers due to competitive pressures, further eroding profits[3].
  3. Negative impact on consumer spending: The higher costs of living due to the weak yen is dampening consumer spending power and demand, especially for discretionary items like travel[3][5].
  4. Excessive volatility: While a gradual weakening of the yen can benefit exporters, the rapid and excessive depreciation makes it difficult for companies to plan and adjust. An exchange rate above ¥155 to the US dollar is seen as less advantageous[1][5].
  5. Potential disruption to supply chains: There are concerns that an excessively weak yen could negatively impact the entire supply chain, beyond just the importing companies[5].
  6. Psychological impact: The weak yen is having a large negative psychological impact, with some executives worried it will discourage younger consumers from traveling abroad[5].
Overall, while a weak yen can boost profits for exporters in the short-term, the current rapid depreciation is causing significant challenges and concerns for a wide range of Japanese businesses.
Sources [1] For Japan Inc., the weak yen may be too much of a good thing https://www.japantimes.co.jp/business/2024/05/01/economy/japan-inc-weak-yen/ [2] Japanese Companies Struggle With Weak Yen (JPY USD) https://www.bloomberg.com/news/articles/2024-05-02/japanese-companies-struggle-with-yen-s-continued-weakness [3] Majority of Japanese firms says weak yen hurts profits: survey https://www.businesstimes.com.sg/international/majority-japanese-firms-says-weak-yen-hurts-profits-survey [4] Japan concerned more about negative aspects of weak yen, finance ... https://www.reuters.com/markets/currencies/japan-concerned-more-about-negative-aspects-weak-yen-finance-minister-says-2024-05-28/ [5] Japanese companies struggle with yen's continued weakness https://www.businesstimes.com.sg/international/global/japanese-companies-struggle-yens-continued-weakness
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