With the weaker yen weighing on the Japanese economy, rising import and raw-material costs are disrupting companies' business decisions, and calls for exchange-rate stability are growing. Market trends and the outlook following coordinated intervention by Japan and the United States are the focus.
The yen fell to a 40-year low of around ¥164 per dollar in July, but rose approximately 5% following coordinated intervention by Japan and the United States. While this move provided some benefit to exporters, cost pressures remain across Japan's import-dependent economy.
Many people familiar with the matter have said that sharp foreign-exchange movements are disrupting earnings forecasts for overseas businesses and making investment decisions more difficult. Greater market stability and lower volatility are strongly sought.
Regarding the optimal yen exchange rate for Japanese companies, a JETRO survey found that approximately one-fifth of companies cited ¥120–124 per dollar as the most desirable level, while only 11% preferred a level above ¥150. However, some believe that a level in the ¥120–130 range is unrealistic given current conditions, and optimism has receded.
Analysts say exchange-rate stability is essential to contain import costs while supporting domestic demand, and indicate that a stable foreign-exchange environment is important for the economy to move beyond deflation.