Japan's executives call for FX stability as weak yen intensify import-cost pressure

Japanese executives are expressing growing concerns about the impact of a weak yen on the economy, as it intensifies import costs. Last week, Japan and the United States intervened to support the currency, which had reached a 40-year low of nearly 164 to the dollar in July. This intervention lifted the yen by around 5 percent. However, even exporters that benefited from a cheaper yen in global markets are now worried about the strain a weak yen places on Japan's import-dependent economy.

Mitsubishi Electric's CFO, Kenichiro Fujimoto, noted that higher costs for energy, materials, and food due to a weaker yen threaten domestic demand and could hinder Japan's recovery from decades of deflation. Norihiko Ishiguro, chairman of the Japan External Trade Organization (JETRO), added that while a weaker yen benefits exports, companies should not assume all advantages since they import almost all their raw materials.

Sharp currency moves disrupt earnings forecasts and complicate investment decisions for companies with global operations. Fujimoto also suggested that the market needs stability, and the desired exchange rate range for a stronger yen may be moving lower, with only 11 percent of firms preferring a rate above 150 yen to the dollar.