THE plummeting of the US dollar to its all-time low this week against the ever-surging yen spells major problems all round for the Japanese economy.
Though recent figures indicate that Japan is in slow recovery, most industries have yet to feel the upswing.
The New Japan Securities Research Institute, had predicted a 20.1 per cent profit gain by Japanese companies in the fiscal year beginning this April. But if the yen continues its high exchange against the dollar as it has been this week, all profits will be lost.
The think tank, associated with the second-tier brokerage, New Japan Securities, said if the dollar hovers around 90 yen, then major industries including car, steel, machinery and non-ferrous metal makers will fall in the red. The high yen disables exporters by pushing up the prices of Japanese goods sold in other currencies and reducing the profits they make overseas.
The currency imbalance drew concern from Shoichiro Toyoda, chairman of the Japan Federation of Economic Organisations (Keidanren), the nation's most influential business association.
'The yen's current level by far exceeds Japanese companies' adaptability and the speed of appreciation is too fast,' he said.