Why Can a Weaker Yen Lift Japanese Exporters?

Separate the impact into translation effects, transaction effects, pricing competitiveness and the side effects of higher import prices.

Estimate separately the translation of overseas-subsidiary profits, receipts from Japan-based exports, room to adjust overseas prices, and higher raw-material and energy costs.

Then examine overseas demand, currency hedging, monetary policy and what the market has already priced in. Profits may not grow if demand weakness or cost inflation outweighs the currency benefit.

Conclusion: Do not stop at “the yen weakened.” Verify how much the company’s profit could actually change.

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