Business circles have gotten confused about Japan’s intervention during the industry shift

Businesses expressed mixed feelings about Japan’s currency intervention on Thursday, with some hailing it as a sign of the government’s determination to stem the yen’s rapid fall, while others questioned its effectiveness.

Masakazu Tokura, head of the Japan Business Federation, the country’s largest business lobby, welcomed the yen purchase intervention. “It means a lot that the government has shown its willingness not to leave speculative moves in the currency market unattended,” he told reporters.

Some company officials in the restaurant business have expressed skepticism about the government’s action as the industry struggled with rising costs of imported food on the back of the war in Ukraine.

“It wouldn’t cut our costs much even if (the intervention) helped strengthen the yen to some degree,” one of them said.

Another said: “We’ll see if it can really curb the yen’s weakness.”

Fumiya Kokubu, head of the Japan Foreign Trade Council, an industrial organization for trading companies, questioned the often touted advantage of a weaker yen in boosting Japanese exports.

“The structure of the Japanese industry has shifted to the type (which earns the most) from an overseas investment to a (depending on) export,” Kokubu, president of Marubeni Corp, said Wednesday at a news conference.

An official at a major machinery manufacturer said a weaker yen still works to help boost earnings when overseas profits are repatriated.

So the intervention “could affect the long-term economic outlook in anticipation of the depreciation of the yen”.