The Japanese yen has tumbled by a fifth against the dollar this year, but broad shifts in the country’s economy mean its impact on Japan Inc is far more uneven than the last time the currency traded at such weak levels 24 years ago.
Japanese companies had long struggled to match the cost competitiveness of rivals in China and South Korea when manufacturing products in their home market, having historically endured a strong currency as well as high electricity bills and labour costs.
The landscape is now shifting as the yen has tumbled 20 per cent this year against the US dollar, reaching a low of ¥145 on Thursday. The real effective exchange rate, a measure of the currency’s strength against those of trading partners adjusting for price levels, has reached its lowest level since 1970, according to Bank of Japan data.