The new Japanese finance minister Naoto Kan said in his fist interview that he would like a weaker yen. Market has moved up above 93 from a low at the end of November at 87. Kan has talked with exporters and he must have gotten an earful. The exporters have been tired of losing business to other Asian countries.
Exporters are key to the any resurgence in the Japanese economy. The global economy is recovering and Japan does not want to be left behind because of an appreciating currency especially relative to China. Research, of course, states that the impact of price changes on export businesses is complex. The pass-through problem has to be looked at on a micro basis based on the competition of the products; nevertheless, the strong appreciation has hurt Japan. The size of the yen appreciation relative to other currencies suggest that talking down the yen will help.
Exporters are key to the any resurgence in the Japanese economy. The global economy is recovering and Japan does not want to be left behind because of an appreciating currency especially relative to China. Research, of course, states that the impact of price changes on export businesses is complex. The pass-through problem has to be looked at on a micro basis based on the competition of the products; nevertheless, the strong appreciation has hurt Japan. The size of the yen appreciation relative to other currencies suggest that talking down the yen will help.
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