Yen Continues to Slide


Reading time ( words)

The Japanese yen continues to weaken and the slide began when the current prime minister was elected two years ago. Prior to his election, one dollar was less than 80 yen, but that figure is now more than 118 yen, a 33% drop. Not all think this is a bad thing. The Japanese Government and large corporations in Japan welcome this depreciation in currency because exports are more competitive in overseas markets. A strong U.S. dollar will buy more Japanese products.

The stock market in Japan also welcomes the weaker yen. The Nikkei Index doubled in two years and automobile manufacturers increased their profits due to a spike in exports thanks to a strong U.S. dollar. The number of cars exported did not increase, but the companies received more yen; more profits for the same amount of work! Auto manufacturers paid out bonuses and increased salaries, which helps finance companies profit as well.

The other side of the coin isn’t so rosy. Companies that rely on imports are taking it on the chin due to a weaker yen. Japan imports most of their raw materials and food and costs have skyrocketed. Inflation is on the rise.

How are electronic companies shaking out with a weaker yen? You would think that Panasonic and Sony could increase their exports with competitive pricing. Unfortunately, it did not happen because Japanese electronics companies shifted their manufacturing to other countries with lower labor costs. Many of these companies built new manufacturing plants in China and southeastern Asia, while others transferred manufacturing to ODM or EMS companies in Taiwan. Nowadays there are not many manufacturing plants remaining in Japan. For this reason, Japanese companies can’t export their products and take advantage of a weakened yen. In fact, they pay more yen for their products made in China when they import them.

Japanese manufacturers lost most of their global market share over the last few years due to poor business strategy. These products include flat panel TVs, cellular phones, personal computers, MP3s, tablet PCs, and more. Their market share in the digital camera market remains on track, but this segment continues to shrink at an alarming rate. Some Japanese companies may throw in the towel. For them, a weak yen does not help their bottom line.

Conservative politicians and traditional economists in Japan still believe a weak yen will make the Japanese economy stronger. This way of thinking is wrong. Stable exchange rates are welcomed by most manufacturers. It is tough to sustain long-term profits in a volatile currency market. The only ones who profit are the speculators who buy and sell these currencies.

Dominique K. Numakura, dnumakura@dknresearch.com
DKN Research, www.dknresearchllc.com

*To view back issues of the newsletter, click here.

Share

Print


Suggested Items

Multilayer Press Technology Using Magnetism to Produce Lamination Heat

11/11/2019 | Victor Lazaro Gallego, Chemplate Materials
A revolutionary concept in multilayer press technology has been developed that uses electromagnetic energy to heat the existing stainless-steel separator plates with a never-before dreamed-of accuracy and precision. The heating and cooling systems—embedded within a robust hydraulic press inside a vacuum chamber design—are controlled using a temperature feedback loop that guarantees perfect fidelity between the press recipe and the press result.

Additive Electronics Conference Set for October 2019 Debut

10/15/2019 | Kelly Dack
Kelly Dack and Tara Dunn talk about the upcoming conference "Additive Electronics: PCB Scale to IC Scale" on October 24, 2019, hosted by SMTA in San Jose, California, and why it's an important event for people to attend—especially those involved in the design process.

SMTA Additive Electronics Conference: Industry Trends

10/10/2019 | I-Connect007
Mainstream PCB manufacturing is often limited to 50-75 microns (mm) line and space. But the electronics industry is evolving quickly. Propelled by the demand for more sophisticated electronics, PCB design is being tasked with finer lines, thinner materials, and smaller via sizes.



Copyright © 2019 I-Connect007. All rights reserved.