Willem Thorbecke, 02 October 2019

Japanese exports in electronic parts and components dramatically fell in value after the Global Crisis and have not recovered until today. This column investigates why Japan lost this comparative advantage. It argues that capital inflows seeking safe havens during the crisis led to a sharp appreciation of the yen and caused yen export prices to tumble relative to production costs. Plummeting profits then hindered Japanese firms from investing enough in capital and innovation to compete with rivals.

Takatoshi Ito, Satoshi Koibuchi, Kiyotaka Sato, Junko Shimizu, 29 June 2015

Japanese firms have been struggling with the yen’s volatility ever since the peg was dropped in 1973. This column, based on a recent survey of Japanese firms, argues that many firms have managed their exchange rate exposure by using operational and financial hedging strategies. It also finds that firms employing currency hedge and invoicing exports in yen are judged by the market to have reduced currency exposures. 

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