“My thinking is that your support had something to do with my winning reelection,” said Abe.
In his second stint leading Japan after an election win in December, Abe says his Liberal Democratic Party’s main objective is a stronger economy
Central to achieving that goal is a weaker yen, which should help exporters, including Japan’s top automakers whom Abe addressed this week.
“Even though we’ve tried our best and put our hearts into our efforts, the strong yen makes us unable to be competitive,” said Abe. “It’s my belief that if Japan stands at the same start line, Japan can’t lose.”
Amid expectations of action, the yen has declined 5% since Abe’s election victory, and 11% since the end of September.
Further weakening can’t come quickly enough for the nation’s manufacturers, says Nissan COO Toshiyuki Shiga.
“The now yen has weakened and stock prices are increasing but these are still [based on] expectations,” said Shiga.
The currency’s unprecedented strength against the dollar reached a pinnacle in October of 2010 – stopping a hair above 75 yen – squeezing corporate profits in the world’s fourth largest exporter of goods.
Nissan CEO Carlos Ghosn has said that every one-yen gain against the dollar cuts 20 billion yen ($228 million) from operating profit and that 100 yen to the dollar is optimal.
Akio Toyoda, Chairman of the Japan Automobile Manufacturers Association and Toyota CEO agrees.
“Brand makers are at the forefront, but they’re supported by parts makers, small- and medium-sized firms and microenterprises. This is the industry,” said Toyota.
“So unless the rate reaches 100, there’s no doubt that Japan’s auto production and monozukuri are in crisis.”
The road ahead may be challenging. Only 1 of 60 analysts surveyed expect the yen to reach 100 against the dollar this year, according to Reuters.
But Abe will ask the Bank of Japan later this month to increase its inflation target – a step that could nudge the currency closer to the industry’s magic number.
