Ford speaks up against Japan and Toyota over foreign currency gains

Article by Anita Panait, on February 11, 2014

Ford strikes Japan and its carmakers once again. This time, Joe Hinrichs, president of Ford's Americas unit, accused Toyota of unfairly benefiting from the Japanese government’s alleged move to weaken the yen. During a speech before The Economic Club of Chicago, Hinrichs said Ford would urge the US Congress to oppose a Trans-Pacific Partnership agreement if it does not include strong currency disciplines.

After his speech, he remarked that it was a big deal when Toyota said that half of its profits are due to currency change of the yen. "When [Toyota President] Akio [Toyoda] came out in support of [Japanese Prime Minister Shinzo] Abe saying we need a weaker currency, that's a corporate policy statement," Hinrichs said.

"Toyota and [Renault Nissan Chairman Carlos] Ghosn said we need a weaker currency and the currency got weaker. He said that according to Morgan Stanley estimate, the recent fall in the value of the yen places around $2,000 per export vehicle into the “pockets of Japan's three biggest automakers."

While Japan denies manipulating its currency rates, Hinrichs said that “every country has a right to conduct sound monetary policy,” which could include legitimate strategies like quantitative easing. He, however, noted that “direct currency intervention cannot be tolerated in the 21st Century." Toyota logged JPY260 billion ($2.47 billion) in foreign exchange gains in its fiscal third quarter.

The yen depreciated 23 percent against the dollar over the past year, Toyota disclosed on Feb. 4. Toyota said its operating profit goes up JPY35 billion for every yen the currency loses against the value of the dollar. Toyota has disclosed that its corporate strategy is to localize production to offset the risk of currency swings, instead of trying to take advantage of them. [source: automotive news - sub. required]

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Topics: ford, toyota, japan

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