Diminished yen an indication of Japan's woes
By Mari Murayama and Kanako Chiba
Bloomberg News
TOKYO — The yen, little changed, is poised to finish its worst year in 12 against the dollar after a report said Japan's unemployment rate rose to a record, adding to evidence the nation's recession is deepening.
Associated Press
The unemployment rate rose to 5.5 percent, its highest in nearly half a century, as Oji Paper Co., Matsushita Electric Industrial Co., and others try to ride out a 14-month-old recession by cutting payrolls. As more breadwinners lose jobs, consumer spending, which makes up 55 percent of the economy, is likely to fall, dragging on the economy further.
Tokyo money traders can expect the trend for a weaker yen to continue toward the new year. With unemployment at its worst in nearly half a century — reported at 5.5 percent yesterday — there is growing evidence that Japan's recession is deepening.
Japan's currency traded at 131.63 per dollar from 131.79 yen in late New York trading yesterday, when it dropped as far as 132.08, its weakest level since Oct. 6, 1998.
"The trend for a weaker yen will continue toward the new year," said Mitsuru Sahara, a vice president for foreign exchange at Sanwa Bank Ltd.
The yen has shed 13 percent against the dollar this year, its biggest loss since 1989, and may still decline further after comments by government officials signaled they aren't likely to oppose a falling yen.
Japan's currency chief Haruhiko Kuroda today reiterated the yen is being corrected from its too-strong level based on Japan's economic fundamentals, indicating the government would tolerate a weaker yen.
A weakening yen may lead overseas investors to sell more Japanese assets, analysts said.
Japan's Nikkei 225 stock average has brought dollar-based investors a 34.3 percent loss, after taking into account the yen's decline. That is the world's third worst performance among 70 primary equity indexes for the period.
