A weaker currency makes exporters more competitive at the price, helping them sell their products cheaper overseas and boosting their profits at home. In the U.S., for example, big tech companies have benefited greatly from the dollar’s decline this year because so much of their revenue comes from overseas.
Of course, a weaker yen is not all good, especially because it increases manufacturers’ costs for imported components and exacerbates the impact of volatile commodity prices, but for now it is still helping Japanese blue chips*.
Nissan, Honda and Toyota have all cited currency weakness as a factor in their second-quarter profit forecasts, according to Reuters.
Nissan last month raised its full-year operating profit forecast by 30 billion yen ($206 million), or nearly 6 percent, to 550 billion yen. Of that, 20 billion would come from a weak currency, while the remaining 10 billion would come from increased sales outside China, Nissan Chief Financial Officer Stephen Ma said at a briefing.
In early August, Honda reported operating profit of 394 billion yen for the April-June period, 90 billion above the company’s initial forecast. At a briefing last week, Honda Chief Financial Officer Fiji Fujimura attributed “almost half” of that gain to the exchange rate impact.