Yen Volatility Spooks Japan's Corporate Leaders

Japan's corporate leaders are voicing concerns over the yen's rapid swings, which have been making it challenging to forecast earnings and plan spending. The currency's volatility has led to a range of issues, including higher costs for imports such as energy, food, and raw materials.

Many large firms set budgets using an 'assumed rate' for the exchange rate, but the yen's whipsaws are making this assumption less reliable. For example, Mitsubishi Corp's CFO Yoshihiro Shimazu mentioned that his firm may revise its 150-yen-per-dollar assumption in light of the currency's recent moves.

The issue is not just about the yen's value, but also about the day-to-day volatility it creates. According to a March survey by JETRO, many companies prefer a stable exchange rate between 120-124 yen per dollar, and few prefer levels above 150 yen.