Japan Exporters Call for `Zero Tolerance' on Yen Gain
Japan needs to take more steps to shield exporters such as Sony Corp. and Honda Motor Co. against a strong yen after intervening in currency markets for the first time since 2004, said company officials, who welcomed the move.
The nation sold yen yesterday to curb gains by the currency after it rose to a 15-year high against the dollar, threatening to undermine an economic recovery. The yen tumbled the most in 22 months, helping the Nikkei 225 Stock Average gain 2.3 percent. The currency rebounded to 85.41 per dollar as of 4:11 p.m. in Tokyo today from 85.75 in New York yesterday, on speculation exporters bought the yen to take advantage of its drop.
Japan’s currency has gained as much as 10 percent against the dollar and 20 percent versus the euro this year, eroding profits at Toyota Motor Corp. and Nissan Motor Co., which are shifting some production out of Japan to stay competitive. Even after the move, the yen remained stronger than the estimates manufacturers have used to calculate their earnings forecasts.
“We appreciate the intervention taken by the government and the Bank of Japan,” Mami Imada, a spokeswoman for Sony, said in an e-mailed statement. “Nevertheless, we expect them to continue taking appropriate measures.”
Sony rose 1.7 percent to close at 2,641 yen on the Tokyo Stock Exchange, after climbing 4.1 percent yesterday. The maker of Bravia televisions and PlayStation 3 game consoles is basing its operating profit forecast of 180 billion yen ($2.1 billion) for the current fiscal year on an exchange rate of 90 yen against the dollar.
‘Impossible’ to Win
Japan’s biggest manufacturers expect the yen to average 90.16 per dollar in the six months to March, according to the Bank of Japan’s quarterly Tankan survey.
“It’s impossible for Japan to win in global markets with the currency in the 80-yen range,” Koji Miyahara, chairman of the Japan Shipowners Association, said at a briefing yesterday in Tokyo. “Japan’s new administration should show it has zero tolerance for a stronger currency and should come up with additional steps,” said Miyahara, 64, who is also chairman of Nippon Yusen K.K., Japan’s biggest shipping line.
The yen slid the most in 22 months after Finance Minister Yoshihiko Noda said the nation sold the currency. The step came a day after Japanese Prime Minister Naoto Kan won reelection as head of the ruling party, beating a challenger who had insisted intervention was necessary.
Canon, Toyota
“The government sent an important message to the world,” Toshizo Tanaka, Canon’s chief financial officer, said in an e- mailed statement. “The impact on Japan’s economy would have been severe if the yen were left to appreciate so abruptly.”
Canon, which gets 78 percent of its sales abroad, gained 0.5 percent to 3,855 yen after advancing 1.9 percent a day earlier. The Tokyo-based maker of printers and cameras forecasts operating profit will shrink by 4.7 billion yen for every 1 yen the currency strengthens beyond 90 against the dollar in the second half of the year.
Toyota, the world’s largest carmaker, advanced 1.7 percent to 3,060 yen. The automaker yesterday rose 3.8 percent, leading gains by transportation-related companies, which rose the most among 33 industry groups in the Topix index.
Shiori Hashimoto, a Tokyo-based spokeswoman for Toyota, declined to comment. The automaker aims to cut production capacity in Japan by about 20 percent as it shifts output overseas.
2004 Intervention
Honda, Japan’s second-largest car manufacturer, rose 0.5 percent after climbing 4 percent yesterday. “We welcome the move by the Japanese government,” said Yuki Watanabe, a spokeswoman at Honda’s Tokyo headquarters.
Japan’s previous currency intervention failed to stop the yen from strengthening to 102 against the dollar by the end of 2004, from an average of about 107 in the first three months of the year, during which the Bank of Japan sold 14.8 trillion yen.
“The intervention in 2004 was a failure,” said Yuuki Sakurai, chief executive officer of Tokyo-based Fukoku Capital Management Inc. “Keeping in mind the size of the Japanese yen market, there’s a limit to what the government can do.”
Finance Minister Noda declined yesterday to say how much the central bank had sold this time.
Japan needs to show it’s serious about weakening the yen, said Masatoshi Nakata, a spokesman for Sumitomo Electric Industries Ltd., an Osaka-based maker of electrical wires.
“This was a blessing,” Nakata said of the central bank’s action. “The government needs to make it clear to the world that this isn’t a one-time shot.”
To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net
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