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Depreciating yen to make effect felt on Taiwan firms

Publication Date : 28-12-2012


Japan's currency yesterday hit its lowest level against the US dollar since September 2010, closing trade at 85.87 yen.

The yen depreciated 0.14 per cent against the greenback to 85.87 yen, its lowest point in the last two years. The Japanese currency declined 0.47 per cent against the euro to 113.78 yen, its most pronounced fall since August last year.

The Japanese yen has been falling further recently after new Japanese Prime Minister Shinzo Abe said that the country's new Cabinet aims to keep the currency at around 90 yen per US dollar in order to boost the country's exports and economy. The Cabinet expects this valuation of the yen will also help keep Japan's inflation in check.

Abe has instructed Japan's central bank to devalue the nation's currency to stimulate growth in the country's stock market.

Economic analysts have commented that the depreciation of the yen stemming from the leadership change may at the same time have a negative impact on corporate earnings in South Korea amid the continued appreciation of the South Korean won.

The yen has appreciated more than 8 per cent so far this year. The rise has been mainly attributable to quantitative easing measures taken by the Bank of Japan.

Effect on Taiwan importing, exporting

According to the Taiwan Institute of Economic Research (TIER) Taiwanese manufacturers and producers in the semiconductor and photoelectric industries may benefit from the yen's depreciation. This would mainly stem from cheaper prices for raw materials and components from Japan.

The weakening yen could also have some negative effects on Taiwan, such as Japanese companies reducing their amount of productin outsourced to Taiwan.


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