The yen reached a fourteen year four month high against the U.S. dollar on Nov 26th when it hit approximately 86 to the dollar. Compared with November of 2007, when the yen was trading at around 111 to the dollar, and November of 2008, when the yen was at about 97 to the dollar, the current exchange rate is causing mixed emotions among the Japanese.
Japanese businesses see the strengthening yen as worrisome. Many Japanese industries rely heavily on exports, and a stronger yen makes it harder to export goods based on price comparisons.
Others businesses are just as worried about the effects from cheap imports. Domestic products, such as food and lumber, competing with increasingly cheap foreign goods are often forced to lower their prices to match, which can lead towards economic deflation. One retail specialist told Chunichi Shimbun reporters, “If we don’t have a system to immediately respond to a strong yen, we don’t have a choice but to lower prices and cut the losses out of our own pockets.”
Politicians seem concerned, too. Prime Minister Yukio Hatoyama told reporters at a press conference, “We believe the cause lies basically with the dollar. Whatever the case may be, we feel it is not desirable to have the exchange rate suddenly change.” Japanese officials have stated that if drastic rate movements continue to happen, there is a possibility that the government may step in to intervene.
However, there are some that see a bright side to a strong yen, particularly those looking to travel outside of Japan. In a video interview on TV Tokyo news, on woman at a currency exchange shop told reporters, “Because the Yen is strong right now, I came a little early to exchange my money. Plus, if the dollar continues to weaken I’ll come to exchange one more time.”
The trend has continued on the 27th, too. The yen briefly hit in the range of 84 to the dollar, according to an NHK report.
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