The Japanese economy has had some bad news in past weeks. The index that measures new housing starts in Japan went down 27.1% in October. The historic news that JAL is lowering their retirement payouts still rocks the news, along with institutions posting historic unbalanced budgets, including JTB and the Bank of Japan.
Usually at the forefront of bad economic news are the effects felt from a strong yen. In an export driven economy with the dollar weakening and the yen strengthening, Japanese exports continue to become more expensive when compared with their competition. The newspapers this morning reported on the yen strengthening and the reactions to it.
Asahi Prime Minister Hatoyama exclaims “We must do something quickly” The Prime Minister, in an interview with the Asahi newspaper, answered questions about the Dubai economic summit he recently attended. When asked about the weakening stock market and the strengthening yen, he responded by talking about the weak dollar and its effects: “I’ve held meetings previously in Japan about this, but basically my thoughts have not changed. There’s been a strong movement of buying another currency in the face of the weakening dollar; in fact I think only the yen has really experienced such strong appreciation. Something must be done quickly in order to keep Japan the second strongest economy in the world.”
Nikkei “From the first Itoyokado starts its 20-50% off sale” In light of the strengthening yen, Itoyokado from December 1st to December 3rd has decided to drop its prices 20-50%. According to the Nikkei, because the Yen’s getting stronger, Itoyokado anticipates that they can buy groceries such as fruit and pork at a lower price.
For example, American made pork will go on sale for 34% off, to 84 yen per 100 grams. Salmon imported from Chile will be 25% off, to 88 yen per 100 grams.
Yomiuri “Stock Market and Strengthening Yen Policy Announced” Prime Minister Hatoyama announced a plan to combat a volatile market on September 29th, according to the Yomiuri. Just like the Asahi the Yomiuri also mentioned the prime minister’s concern about rising stock prices and a falling yen, but they noted the specifics of how the plan will combat these two things has yet to be determined.