Somehow it seems like much longer ago, but at its lowest point in 2007, the Japanese yen was trading at the rate of 124 to one U.S. dollar. Last week, the yen was threatening to break past the 80 yen to one dollar barrier. It should be a matter of simple arithmetic, says Shukan Post (Nov 5), that imported goods should be selling around 35% less than they were three years ago.
Because many of its thermal power generators rely on imported fossil fuels, for every 1 yen of appreciation against the dollar, Tokyo Electric Power Co profits by an additional 14 billion yen per year. But the savings passed on to individual householders from this October were miniscule -- around 20 yen per month. Isn't a little more generosity called for?
"There's a time lag on power fees," a spokesperson for the utility explains. "The October charges reflect May-to-July fuel costs, whereas November's will be June-to-August. We expect to reduce them by another 70 yen or so."
Shukan Post then asks All Nippon Airways about abolishing the fuel surcharge and reducing fares. A calculation shows that for each yen that appreciates against the dollar, the company should realize an annual operating profit of 300 million yen. But it has not reduced fares.
"Certainly the appreciation of the yen brings an advantage, but deficits were incurred when the yen was trading at a less favorable rate, so we have no plans to reduce prices to reflect the current exchange rate," is how the company's spokesperson explains it.
Still, the magazine persists, wouldn't a reduction in fares result in an increase in passengers?
"There are a variety of factors we have to consider when calculating fares, such as the prices of competitor carriers," comes the reply.
Calculated on a caloric basis, Japan's food self-sufficiency ratio in 2009 was about 40%. The soaring yen, then, should have provided restaurants and foodstuffs manufacturers with a windfall.
A spokesperson for Sukiya, the largest beef-over-rice said the company would not accept reporter's questions related to yen appreciation.
"Their beef comes from Australian cattle, and the yen value has declined relative to the Australian dollar, so they are actually at a disadvantage in this case," says a source in the food industry.
"Our food procurements are pegged to the Japanese yen, so there is almost no advantage to the appreciate of the yen," a spokesperson for the No. 3 chain Matsuya Foods tells the magazine.
No. 2 chain Yoshinoya, which sources beef mostly from the U.S., says that the company contracts procurements are set to adjust prices. "We're not affected by exchange fluctuations," he insisted.
McDonald's Japan says that its food import costs are contracted one to three years in the future, so the merits of yen appreciation are not immediately evident. "We're not currently contemplating any price reductions," a spokesperson told the magazine.
Acer, a Taiwan-based personal computer manufacturer, has reduced retail prices by about 20%. A spokesman in Acer's marketing department says that the company will endeavor to keep passing on benefits of yen appreciation to end users. "A new model was launched last February at a manufacturer's suggested retail price of 89,800 yen, but it has now been reduced to 69,800 yen."
A spokesperson for Hewlett-Packard Japan, meanwhile, said, "If other companies use yen appreciation as a reason for reducing their prices, there's a possibility we will do so as well."
A surprisingly high percentage of bicycles are produced outside Japan. Michiyoshi Arai, president of Ishimaru Cycle Ltd, tells the magazine, "About 90% of bicycles sold in Japan are imported, so we are thinking about price reductions. But if we do so and the yen were to subsequently decline in value, it would not be easy to return to the old price. As a manufacturer, we're scared to reduce prices based on exchange rate fluctuations."
The higher yen is definitely an advantage when bringing foreign entertainers to Japan, because their guarantee is invariably based on dollars.
"The price of an S-class seat to the Broadway musical we're bringing to Japan at the end of this year will be set under 10,000 yen, down by several thousands of yen," says promoter Yoshito Yamazaki, who added that while some top performers are demanding higher guarantees, his company might consider reducing prices provided the current yen rate continues for another six months.
"We promise to do our utmost to attract as many customers as possible," he pledges.© Japan Today