WASHINGTON, Jan. 7 (UPI) -- The Japanese yen's weakness may be working in favor of the country's exports, but on Monday exporters said the currency's decline should be capped at 140 to the U.S. dollar.
"If the dollar goes beyond 140 yen, then Asia will be outraged," said Takai Imai, chairman of the Japanese Federation of Economic Organizations (Keidanren), arguably the country's most-influential business group. Imai also heads Nippon Steel Corp., Japan's biggest steelmaker.
Leaders of the nation's four top business organizations -- the Japan Federal Employers' Associations (Nikkeiren), the Japanese Association of Corporate Executives (Keizai Doyukai), the Japan Chamber of Commerce and Keidanren -- broadly agreed the yen would likely continue weakening. The currency currently stands just above 130 yen to the greenback, its highest level since October 1998.
"If there is no policy to actually strengthen the yen, it will be between 130 and 140 yen, (as an equilibrium level)" said Hiroshi Okuda, Nikkeiren chairman and head of Toyota Motor Corp. He pointed out that the U.S. economy was beginning to rebound, while Japan's own growth potential continued to languish.
With little prospect for the Japanese economy to pick up in the near-term, a weakening currency is one of the few means for the country to get back on track for expansion. A weaker yen makes Japanese exports cheaper, and thus more competitive overseas.
But the devaluation of the Japanese currency has already miffed a number of Asian nations, particularly South Korea and China.
"The weak yen could diminish Korea's export competitiveness in key sectors such as steel, cars and electronics," South Korean president Kim Dae-jung said in Monday's meeting with economic officials and business leaders Monday.
"The government will focus its efforts on strengthening competitiveness of exporters," he added.
That would be a major concern for Korean businesses, as more than 60 percent of the country's exports compete directly with Japanese products overseas. Likewise, Chinese government officials also have made clear their opposition to the yen's increasingly favorable rate against the greenback.
Still, neither the United States nor any other industrialized nation has made any official comment against the dollar's recent rise against the Japanese currency. Moreover, financial analysts do not expect the issue to be raised by major developed countries at the current rate.
