Japan Inc., investors should prepare for sudden surge in yen
(From The Japan Times July 17 issue)

要約
円の急騰に備えよ

The cheap yen is a boon to Japanese exporters. Moreover, individual investors can reap high returns in the yen by investing in foreign currency. The main cause of the yen's decline in value relative to the dollar and euro is Japan's low interest rates. The Bank of Japan hesitates to raise the rates due to continued deflation amid economic recovery.

The BIS report said, "The underlying problem seems to be too firm a conviction on the part of investors that the yen will not be allowed to strengthen in any significant way." Yet there is an expectation in the market that the central bank will raise the benchmark rate after the July 29 Upper House election.

It's dangerous for enterprises to remain content with the cheap yen. They need to make efforts to make their products competitive through increased production efficiency, and improved production skills and methods. It is also necessary to make the Japanese economy less reliant on exports. To increase domestic demand, passing the fruit of the economic recovery on to workers will be important.

The Japan Times Weekly: July 21, 2007
(C) All rights reserved

    　円安は、輸出企業にとって高収益のもとになるうえ、個人投資家に、外貨買いで大きな利益を得る機会を与える。円の対ドル、ユーロ相場の下落は、日本の低金利政策によるところが大きい。日銀は、景気回復の中でデフレが続いているとして、金利引き上げに消極的である。

    　BISは「大幅な円高は許されないという投資家の過信が問題だ」としているが、市場には、7月29日の参院選後に日銀が利上げをするとの観測もある。

    　企業が円安に満足しているのは危険であり、生産性向上で競争力を向上させる必要がある。日本経済の輸出への依存度も低下させる必要がある。内需を増やすために、労働者へ景気回復の成果を分配することも重要だ。