In the middle of May the yen weakened past the 102-per-dollar mark, which has not happened since the autumn of 2008. The decline of the Japanese currency below the 100 mark has been expected by traders since the Central Bank in Tokyo announced in the early spring it aimеd at reaching two-percent inflation in the next 2 years.
Bank stimulus in Japan continues
Finance ministers and bankers have so far reaffirmed the commitment they took in February not to interfere in the Japanese stimulus policy. However, some analysts pointed out that this policy has been a frequent topic of discussion at high-level meetings. That is why recently Bank of Japan Governor Haruhiko Kuroda needed to reiterate that the increased monthly bond purchases aim just at ending long-term deflation in Japan.
This stimulus continues to bring the yen down, thus stimulating exports of Japanese companies. Companies like Toyota have recently reported doubling of incomes.
Fresh air for Japanese companies
The weak yen increases the competitiveness of Japanese products abroad. At the same time a weaker yen means even higher value of foreign income.
For Japanese car makers and other export oriented companies this is a breath of fresh air and a period of recovery after production was hurt by the devastating earthquake in 2011.
The positive effects on the Japanese economy have already started to have a positive effect on other economies too, as markets slowly start to exit stagnation. Inflation would encourage consumer spending, as well as more investments in the Japanese economy, analysts also say