6 January 2004, 13:15  Japan business leaders concerned over strong yen

TOKYO, Jan 6 - Japanese business leaders expressed concern on Tuesday about the strong yen, worried that its rise against the dollar could nip an export-led economic recovery in the bud. The U.S. currency hit a three-year low of 106.06 yen on Monday. It firmed to around 106.30 yen in late Tokyo trade on Tuesday, with traders suspecting intervention by the Japanese authorities. A strong yen eats into exporters' dollar-based export income and makes their products less competitive overseas. Hiroshi Okuda, the head of Japan's biggest business lobby, said on Tuesday that it was vital for Japanese firms exporting to the United States that the dollar stayed above 105 yen. However, Okuda, chairman of the Japan Business Federation and also of auto maker Toyota Motor Corp <7203.T>, told a news conference that the overall impact of a weak dollar could be mitigated for Japanese companies exporting to both the United States and Europe by the appreciation of the euro. Two other top business leaders, Kakutaro Kitashiro, chairman of the Japan Association of Corporate Executives, and Nobuo Yamaguchi, chairman of the Japan Chamber of Commerce and Industry, told the same news conference that the dollar/yen rate was near the limit that Japanese exporters could endure.
Earlier, Toyota President Fujio Cho told reporters at a New Year reception that he felt the yen was "a bit too strong" in light of Japan's economic fundamentals and he was concerned that a further appreciation could hamper Japan's economic recovery. "The current dollar level of around 106 yen could already be harsh for Japanese industries. I think a dollar/yen level of around 110 yen can be seen as comfortable for industries in general," Cho later told s. But Cho said Toyota had taken a conservative approach in predicting its business performance in the latter half of this business year ending in March, which took into account the risk of the yen's appreciation to its current level. Yoichi Morishita, chairman of the board at Matsushita Electric Industrial Co Ltd <6752.T>, said the yen was coming closer to "a danger zone". "If the dollar falls to 105 yen, that would be worrisome," Morishita told reporters at the reception. "Still, its direct impact on industry may be eased as Japanese firms have expanded their overseas production." Nobuyuki Idei, chief executive officer of Sony Corp <6758.T>, another leading Japanese exporter, said he expected the yen to remain firm for some time.
"Since I became president in 1995, there have been times when the dollar/yen rate was at 78, so we can't be surprised if the rate goes to the 90-95 yen level," Idei said. Sony, which generates nearly 70 percent of its revenue overseas, lowered its assumed dollar exchange rate in October to 110 yen for the six months to March 31 from its previous estimate of 115 yen. Idei saw some positive aspects, however. "It's not such a bad thing for the Japanese economy for the yen to be strong. Broadly speaking, a strong yen means foreign money will flow into Japan and that might help stock prices."///

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