JapanpremierWorld News

Japan premier warns of negative impact on companies from weak yen


Investing.com - Financial Markets Worldwide

Please try another search

ReutersEconomy33 minutes ago (Oct 12, 2021 06:00AM ET)


© Reuters. FILE PHOTO: Japan’s new prime minister Fumio Kishida delivers his first policy speech at parliament in Tokyo, Japan, October 8, 2021. REUTERS/Kim Kyung-Hoon

By Leika Kihara and Tetsushi Kajimoto

TOKYO (Reuters) – Japan’s Prime Minister Fumio Kishida said on Tuesday the government will scrutinise the economic impact of any further declines in the yen, which risk hurting corporate profits.

The rare warning over the potential disadvantage of a weak yen by Kishida, who took over as prime minister last week, underscores growing concern among policymakers about the damage rising input costs could have on Japan’s fragile recovery.

“If the yen weakens further, it will boost exports. On the other hand, it will lead to a rise in costs for companies through higher import costs,” Kishida told parliament.

“We will closely watch the impact of currency moves on companies,” he said, when asked by an opposition lawmaker on how the government would respond to excessive yen declines.

The government will help small and medium-size firms cope with the rise in costs through financial support and steps to boost their productivity, he said.

Policymakers have historically welcomed a weaker yen as it makes the export-reliant economy’s goods more competitive abroad.

But the yen’s drop to a near three-year low against the dollar, coupled with a spike in fuel prices, risk squeezing profits for firms already hit by factory disruptions and supply bottlenecks blamed on the COVID-19 crisis.

The Japanese currency sank as far as 113.495 per U.S. dollar on Tuesday, a level not seen since December 2018.

Japan’s wholesale inflation hit a 13-year high in September with the yen-based import price index surging at a record pace, a sign the sliding yen was forcing firms to pay more for raw material imports.

Kishida said the government would consider expanding tax breaks for companies that boost wages by offering bigger corporate tax exemptions and targeting a wider pool of firms.

Such steps, along with a fresh stimulus package to cushion the blow from the pandemic, are among Kishida’s campaign pledges ahead of a general election on Oct. 31.

Japan’s economy recovered from last year’s pandemic-induced doldrums on robust exports. But supply constraints and rising raw material costs cloud the outlook by hurting manufacturers, who have been key drivers of growth.

Related Articles

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

tp

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close
Close