Greek Drama, Yen Strength
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Japanese stocks continue to be battered as Japanese companies are increasingly impacted by the surging yen, which is cutting into Japan's crucial export business. Economic uncertainty, especially concerning PSI talks in Greece, has led to investors flocking to the yen, one of the few remaining havens for investment stability.
The strength of the yen has led to Japanese manufacturers such as Honda Motor Co. (NYSE: HMC) and Toyota Motor Co. (NYSE: TM) ramping up capacity in their U.S. plants in order to lessen dependency on exports from their Japanese plants. For example, Honda is saying it will build its new NSX supercar in Ohio after anticipating the strength of the yen will shave off about 57 billion yen from annual profit. Meanwhile, Masaru Hamasaki, chief strategist at Toyota Asset Management Co., notes that the soaring yen will grind down manufacturers competitiveness and profits all year, stating that “The effects of a stronger yen are just too much, even for the best-run companies.” Honda as well as fellow Japanese conglomerates Toshiba and Fujitsu lowered their earnings forecasts yesterday for the year ending in March 31, saying that the strong yen was hampering a recovery from output setbacks catalyzed by the March 11 earthquake.
More about the strength of the yen can be found here.
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