Strong Yen Hurts Japan's Chemical Firms

Abstract

The Japanese yen has a lot more muscle than it did a year ago. Japanese chemical companies have a lot less. As the yen has appreciated from about 255 to the dollar a year ago to about 155 now, it has given a double dose of trouble to many Japanese companies, chemical companies included. First, it has hurt their trade. The stronger yen makes Japanese exports less competitive in world markets and imports become more competitive in the Japanese domestic market. Meanwhile, as the yen has appreciated against the dollar, it has triggered an economic slowdown in Japan. The results have not been surprising. For many Japanese chemical companies, sales are down. Profits also are down or have disappeared. On a yen basis, sales of Showa Denko were down 15% for the first half of its fiscal year, which ended in June. Profits were down 31%. Sumitomo Chemical, whose fiscal first half also ended in ...