Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

Japan's Prime Minister Shinzo Abe attends a lower house plenary session at the parliament in Tokyo, Feb. 5, 2013.

ISSEI KATO/REUTERS

Japan's major exporters are quickly reaping the benefits of a weaker yen, upgrading profit projections and inspiring confidence in the ability of a newly elected government and a more dovish central bank to steer the country out of two decades of economic malaise.

Toyota Motor Corp. underscored the new air of optimism on Tuesday when the auto giant hiked its profit forecast for the current fiscal year to a five-year peak. This followed similar upward revisions last week by Nintendo Co. and Japan Tobacco Inc. A weaker currency, coupled with a recent wave of cost-cutting in autos, electronics and other key sectors, signals a surge in profitability for Japan Inc.

In the markets, it's being called "Abenomics," named for the new Prime Minister, Shinzo Abe, who has taken his overwhelming victory in December as a green light to pursue an economic revival strategy centred on massive infrastructure spending, more debt financing and monetary policies designed to depreciate the currency and put some inflation back into the deflation-prone economy.

Story continues below advertisement

So far, the markets seem persuaded he will succeed in at least one part of his plan – bringing down the yen's value.

To that end, Mr. Abe has ratcheted up pressure on the famously conservative Bank of Japan to do its part by doubling its former 1-per-cent official inflation target and cranking up the printing presses.

The yen slid Tuesday after central bank Governor Masaaki Shirakawa announced that he is leaving his post March 19, three weeks before his term expires. This coincides with the departure at the same time of his two deputy governors.

This clearing of the decks is the main reason for the yen's decline, said chief currency strategist Camilla Sutton of Scotia Capital. Or, as she phrased it, the "plot." The Governor's decision underlines that "there is going to be a sea change at the Bank of Japan," she said.

"Arguably, in going a few weeks earlier, he streamlines the handover," said Mark Williams, chief Asia economist with Capital Economics in London. "The bigger question is whether or not the opposition will allow it to go smoothly. Japan has a history of quite messy transitions at the Bank of Japan."

The currency story also features continuing subplots, including the dispute with China over control of a handful of tiny islands in the East China Sea, which escalated again on Tuesday. The trigger was Tokyo's warning to Beijing stemming from a recent incident when a Chinese military ship briefly trained radar used to direct weapons on a Japanese naval vessel near the islands.

But these are temporary blips. And questions remain about whether Japan can pursue a weak-currency policy for a lengthy period without triggering an inevitable response from such key competitors as South Korea, whose own exporters have been hit by a strong won and its 27-per-cent rise against the yen in the past 13 months.

Story continues below advertisement

French President François Hollande fired his own shot Tuesday, telling the European Parliament that the euro zone needs "a foreign-exchange policy. Otherwise, it has an exchange rate imposed on it that does not correspond to the real state of the economy."

Japanese executives, though, would rather talk about currency gains than currency wars.

"Ever since the new government took control, it feels as though Japan is filled with the spirit for economic revival," Toyota senior managing officer Takahiko Ijichi told reporters.

Japanese corporate profits are likely to soar by close to 40 per cent in the next fiscal year, said economist Andrew Smithers, chairman of London-based Smithers & Co. Ltd., who keeps close tabs on Japanese developments.

Follow related topics

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies