About half of Japanese companies think the government should start defending the yen, whose current decline could have serious consequences for fuel prices and imports. Over the past two years, Prime Minister Shinzo Abe has tried to shore up the economy and cure deflation with massive monetary stimulus that has led to a weakening yen. The highly anticipated downward trend is now galloping faster than expected: the drop of the Japanese currency to its lowest level in six years at 110.09 against the dollar last October 1st marked an 8% decline in three months and generated protests in world of business. In short, Abe's medicine is becoming poison for Japanese industry.
Indeed, according to a Reuters survey, after the yen regained ground at 106, expectations that the US Fed will postpone the interest rate hike could generate new weakness in the yen. The poll, conducted between 30 September and 14 October, shows that 45% of Japanese companies want Tokyo to intervene if the yen settles at 110 against the dollar.
235 of the companies would welcome an intervention at 115 and 20% at 120. The research involved the executives of 486 companies with a capitalization exceeding one billion yen. Japan's sensitivity to a weak yen became particularly acute following the 2011 Fukushima near-nuclear disaster, which cost the country 3 trillion yen in extra fuel import charges.
