Toyoda changes stance on forex

Shoichiro Toyoda, chairman of the Japan Federation of Economic Organizations (Keidanren), said Feb. 3 an exchange rate of between 110 yen and 120 yen to the dollar would be appropriate, revising his previous acceptance of a higher yen.

“I had been saying last year that a level of between 100 yen and 110 yen to the dollar would be desirable, but taking into consideration various opinions, I have come to the conclusion that a level of between 110 yen and 120 yen would be adequate,” Toyoda said. “This means the world now sees Japan that much weaker,” he said, citing the need for further economic deregulation and corporate restructuring to rebuild the nation’s strength.

Toyoda said that although the yen’s current level of around 122 to the dollar is too low, he largely supports the current situation. Also backing the yen’s depreciations are major manufacturers, such as automakers and electronics firms. Despite expanded production overseas, they are able to export large quantities and increase profits on a weaker yen.

Regarding bad loans at financial institutions, Toyoda said the institutions should make efforts themselves to dispose of such loans as soon as possible. At the same time, however, he called for creation of a fundamental network, including possible use of public funds, to ensure that the collapse of financial institutions does not lead to a breakdown of the nation’s financial system.