The excessive yen decline burdens Japan's middle class and calls for political measures

The Japanese economy is struggling with the consequences of an overly weak yen. As recently outlined in an interview, Ken Kobayashi, Chairman of the Japan Chamber of Commerce and Industry (JCCI), warns of the excessive impact of current exchange rates on small and medium-sized enterprises in the country. The JCCI represents over 1.2 million businesses and acts as a voice for the middle market.

Market Speculation Fuels Excessive Yen Weakness

According to Jin10, the core of the problem lies in market speculation leading to extreme exchange rate fluctuations. While authorities have already taken measures, Kobayashi considers them insufficient. He refers to survey results from his chamber, which show that an exchange rate of about 130 yen per dollar would be sustainable for the economy. The current development—with fluctuations between 159 and 152 yen—exceeds what companies can endure.

Pressure on Wage Increases and Corporate Profits

The excessive yen decline directly threatens plans for wage increases, which are central to the Japanese economy. Import-dependent industries see their costs skyrocket, while export-oriented companies benefit in the short term but suffer from long-term instability. Kobayashi emphasizes that the burden on small businesses is disproportionately high, as they have less flexibility in offsetting costs compared to large corporations.

Calls for Comprehensive Foreign Exchange Policy

The chamber chairman urges the government to deploy a full toolkit of foreign exchange measures. This includes direct market interventions, controls on exchange rate development, and verbal warnings to speculative actors. While the current government policies show some effort, Kobayashi considers this a too cautious approach given the economic reality. His message is clear: not only marginal rate adjustments are necessary, but a coordinated and vigorous political response to the excessively weak yen.