How corporate Japan is weathering a strong yen

ON JAPAN

As the yen approaches record levels against the dollar and euro, Kasumigaseki, Tokyo's administrative centre, is again deliberating a policy response.

Ministers’ alarm at the inexorable appreciation of the yen, contrasts with the relatively calm response of Japan’s corporate leaders. This is because the yen’s real effective exchange rate is 30% below its April 1995 peak, and Japanese companies are today more multi-national, more dependent on demand within Asia and more competitive at home. Further evidence of Japan’s global competitiveness is its large and persistent trade surpluses within Asia. Japan is unusual in having a trade surplus with China. Taiwan’s trade deficit with Japan is 7% of GDP and Korea’s 4%, despite a 60% appreciati...