Japan's Executives Sound Alarm Over Weak Yen Risks

Japanese executives are warning about the risks of currency swings and a persistently weak yen on their economy. The strain from a low-value yen is putting pressure on Japan's import-dependent economy, even for exporters that benefit from cheaper currency in global markets.

The yen hit a 40-year low at nearly 164 to the dollar in July, prompting a joint Japan-U.S. currency intervention that lifted the yen by around 5%. Mitsubishi Electric's chief financial officer, Kenichiro Fujimoto, said 'Problems affecting the entire Japanese economy affect us too.'

A weak yen increases costs for energy, materials, and food, weighing on domestic demand and threatening Japan's emergence from decades of deflation. While a weaker yen has advantages for exports, companies like Fast Retailing, owner of clothing brand Uniqlo, expect to raise prices by about 4% to offset the decline.

Companies are seeking ways to cut costs, with Ryohin Keikaku, which operates the Muji chain of home stores, bolstering in-house production rather than relying solely on price increases. Sharp currency moves complicate investment decisions and upend earnings forecasts for companies with global operations.