The Japanese yen continued its onslaught against the dollar as it breached a value of JPY100 against the US currency Thursday, May 9, 2013. The last time the yen had traded at JPY100 against the dollar was four years ago. Historically, a trading value of 100 means that the yen is still strong.
The highest value of the yen was recorded in 2011 when it hit JPY75.35 against the dollar, while its lowest in the decade was in 2007 when it reached JPY124.14.
However, the yen breaching JPY100 was considered a milestone, since it means that Japanese carmakers may no longer be constrained by the high value of yen, which had been affecting their profits in the last few years. It also means a recovery for the Japanese economy, as it urged investors to pour in their money in the country, driving the Nikkei 225 Stock Average to its highest level since 2008.
The weakening yen has increased the market value of Toyota Motor Corp. by almost $100 billion. It began depreciating in mid-November 2012. The weakening yen also tripled the market value of Mazda Motor Corp. Meanwhile, Japanese carmakers are getting big boosts from the weakening. There is no reason for them to slack off, as they now face tougher competition than five years ago.
Carmakers from the United States (General Motors, Ford and Chrysler), Germany (Volkswagen, BMW and Daimler) and South Korea (Hyundai and Kia) are posing a great challenge to their Japanese counterparts. They are catching up quickly against Japanese carmakers, which used to enjoy a great advantage over them in several areas, according to Yuuki Sakurai, president of Fukoku Capital Management.