Yen Surge Threatens to Wipe Out Japan’s Recovery From Quake

[dkf]

Aug. 2 (Bloomberg) -- The yen's biggest monthly advance since 2008 is threatening profits of exporters from Toyota Motor Corp. to Nissan Motor Co., endangering the nation's rebound from March's record earthquake.

The currency traded at 77.04 per dollar late yesterday in Tokyo, 7 percent higher than the 82.59 yen-dollar average that exporters used for profit forecasts in a Bank of Japan survey. Toyota sees a yen stronger than 80 as a brake on growth.

Japan's "Mr. Yen," former top currency official Eisuke Sakakibara, forecasts the currency will climb to as high as 75 after already reaching a post World War II record of 76.25 in March. With reconstruction efforts bogged down in political wrangling, the yen's advance may add pressure on Prime Minister Naoto Kan to quit and push the Bank of Japan to inject more money into the economy.

"The strong yen is the biggest uncertainty facing Japan's economic recovery," said Eiji Hirano, formerly a BOJ executive director and now the executive vice president of Toyota Financial Services Corp. "Japanese companies were doing all they could to get back on their feet, helping the nation rebound faster than expected -- the strong yen could kill all of the optimism that was built up on that."

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/07/31/bloomberg1376-LP8JAN1A1I4H01-2ERN8C2R4V8M5F811I3JHM52AB.DTL

[Art_from_Ark]

1. The strong yen is a big problem

I was talking to a director of a fairly large Japanese company the other night. He said the strong yen is killing his overseas business. And this is on top of the 200 million dollars in damage that his East Japan production plant sustained as a result of the March 11 disasters.

[girl gone mad]

5. It will probably pull back soon..

even without intervention from the BOJ, but with the EURO looking so precarious right now, yen downside is likely limited.

How are you? You mentioned in another thread you were experiencing some indirect effects. Thanks for the note on gold, it was an interesting read.

[Art_from_Ark]

6. I think the BOJ will have to start cranking out yen

You are probably right in that yen downside is likely limited, and that is what has people like that company director concerned.

Indirect effects from the disasters include greatly reduced discretionary spending by research institutes, etc., which is taking a heavy toll on my work.

The most recent coin show in Tokyo was very quiet. By far, the most active buyers were from China. Dealers were very reluctant to buy gold, and there was almost no interest in silver.

[girl gone mad]

12. That sucks. :(

Japan has always been a small part of my business in volume, but disproportionately large in terms of amounts. It's been nonexistent since the end of March even though the strong yen should benefit us.

Do you have any exposure to the Australian market? They seem to be spending, still.

[Art_from_Ark]

14. I'm not surprised that business has gone down since late March

It has been the lousiest of years here. Absolutely terrible.

Unfortunately, the business I'm in doesn't have any way to take advantage of the Australian market.

[MADem]

2. Jesus, that IS a strong yen!

The most yen I ever got for a buck was around 270, and I stocked up. I usually got around 220 or so. This was way back in the dark ages, though, when Japan was considered expensive but not usurious.

[Art_from_Ark]

7. That must have been before the 1985 Plaza Accord

which artificially increased the value of the yen from about 220 to 160 in a matter of months.

[MADem]

8. It was in the four years preceding that very agreement!

I wasn't living large, but I could make do over there. I wouldn't even try now. Way too rich for my blood, even to visit.

[Art_from_Ark]

9. It's not that prices have gone up so much in Japan

in yen terms, but they certainly have in dollar terms. But you could still probably visit Japan on a limited budget by traveling on a rail pass and staying at youth hostels.

[MADem]

10. I'm too old, I like my comforts.

I could probably manage it cheaper still by going Space A air and timing my visit when military lodging has spare rooms....but it's a ways to go. I'll stick with my memories!

[Art_from_Ark]

11. Youth hostels aren't too bad

In fact, I've stayed at several nice ones. Sometimes they're even used by business travelers, and I've met foreign tourists in their 50s and 60s at Japanese youth hostels.

And with the Japan Rail Pass, you can travel on the very comfortable bullet trains.

[MADem]

13. Those trains are something--more reliable than the Chinese one, we've learned! nt

[girl gone mad]

3. Ironic that you would post this news.

I've done well long yen over the years.

Happy to take the other side of the trade against foolish QTM/Friedmanites and hyperinflationistas such as yourself who are so thoroughly (and wrongly) convinced that high debt and government printing always leads to currency collapse.

[NuttyFluffers]

4. that's very, very bad...

for both sides of the pond. :(

the really tiny people are going to take a bath on this. and i already can imagine the exchange students whimpering. :(