Keidanren to Discuss Pros and Cons of Weak Yen; Business Lobby Traditionally Favored Weaker Currency

The Yomiuri Shimbun

13:18 JST, November 28, 2023

The Japan Business Federation (Keidanren) plans to discuss the positive and negative impacts of the weak yen on the Japanese economy at a meeting of its chairman and vice chairs early next month, according to informed sources. It is quite unusual for the business organization to take up the theme of the weak yen’s pros and cons as it has traditionally favored a weaker yen.

Chairman Masakazu Tokura and all vice chairs are set to take part in the meeting, scheduled for Dec. 4. The vice chairs are expected to seek opinions on the issue because some Keidanren member companies are expressing concerns about the weak yen’s impacts on the Japanese economy.

The meeting will be closed, but the federation is expected to reflect the discussion’s outcomes in its policy proposals in the future.

Since the postwar period of rapid economic growth, a weak yen has been welcomed by automakers and electrical manufacturers, which are Japan’s leading industries, as the currency’s depreciation is advantageous to such export-oriented companies.

As the post of Keidanren chairman has traditionally been held by executives from such export-oriented companies, the country’s industrial world has tended to see the weak yen as beneficial.

However, the yen’s rapid depreciation since April last year has exposed its adverse impacts on the Japanese economy. At one point, it hit the ¥151 against the dollar.

Japan is dependent on energy imports, and soaring energy prices are putting particular pressure on the earnings of small and mid-sized companies. Price increases are outpacing wage hikes, hindering consumption.

The Bank of Japan continues readjusting its monetary easing measures on the basis of economic and price conditions. But one Keidanren vice chair said the moves have been too slow.

Stronger calls may emerge for the central bank to further change its policies.