What a difference a day makes! Just yesterday, Japan's markets were cheering the US debt deal ending up, but today, markets closed down to 1.2%. Why? Lingering concerns about the real US economy as well as the value of the US dollar versus the surging Yen. Despite the passage of the house deal, the markets reacted negatively to a manufacturing report, weak dollar is especially hurting corporate Japan, eating into corporate profits, when that money is repatriated back here in Japan. We saw the currency issue play out at Toyota's first quarter earnings, Toyota saying that its net income for the months from April to June of this year fell 99.4% year on year. Toyota did raise earnings forecast for the full fiscal year though. Toyota says it is still hurting in the aftermath of the tsunami and the earthquake, but also hurting the company severely is a weak US dollar versus a surging Yen. An executive after earnings called the currency exchange “too much for manufactures to bear”.
“I understand that it is a fate to adapt to ever changing exchange rates, but this situation where the Yen has passed 80 yen and it is now at 76 yen, for our exporters, it's extremely tough.”
He also added that they are having trouble: Toyota that is having trouble keeping up with the currency trend of the US dollar versus the yen. So now all eyes are turning to the Bank of Japan who meets on Thursday of this week, Thursday and Friday amid heavy speculation that there could be some intervention on the yen.
Kyung Lah, cnn, Tokyo
