Global Economics

Japan’s prime minister cautions of the harmful impact of a weak yen on firms.

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Japan’s Prime Minister, Fumio Kishida, warned on Tuesday that the government will examine the economic implications of any more yen depreciation, which could harm company profitability.

In September, Japan’s wholesale inflation reached a 13-year high as rising global commodity prices and a weak yen drove up input costs, putting additional strain on enterprises already dealing with supply bottlenecks and clouding the economy’s outlook.

“If the yen weakens further, it will boost exports. On the other hand, it will lead to a rise in costs for companies through higher import costs,” Kishida told parliament. “We will closely watch the impact of currency moves on companies,” he said, when asked by an opposition lawmaker on how the government would respond to excessive yen declines.

The government will assist small and medium-sized businesses in dealing with rising costs by providing financial assistance and initiatives to increase productivity, he added. Historically, Japanese authorities have welcomed a weaker yen because it makes the export-reliant economy’s goods more competitive abroad.

However, given the country’s reliance on imports for gasoline, raw materials, and food, domestic enterprises are equally exposed to rising prices from a weak yen.

Story by : Norvisi Mawunyegah