Key Points
- Japanese business leaders urge government action to strengthen the weak yen.
- Weak currency raises import costs and inflation, hitting households and SMEs hard.
- Continued BOJ policy uncertainty limits yen recovery, prompting calls for coordinated action.
Japan’s top business lobbying groups have urged the government to take action against the yen’s persistent weakness, warning it is squeezing households and companies alike. Leaders from two influential organizations told local media that while a low yen can help exporters, the overall economy now suffers from rising import costs and inflationary pressure that erode domestic spending power.
The head of Japan’s largest business lobby said a stronger currency would benefit the nation in the long term. He acknowledged that exporters enjoy gains when the yen is weak, but stressed that balanced strength offers broader economic stability. Many companies face higher raw material costs, especially smaller firms that lack pricing power and import essentials in dollar terms.
Despite cautious optimism earlier in 2025, the yen failed to capitalize on global dollar weakness. The Bank of Japan raised interest rates twice during the year, yet the currency ended 2025 around 157 per dollar. That pace left the yen close to levels that previously prompted officials to signal possible market support efforts.
The central bank’s rate hikes reflected mounting inflation pressures and a desire to normalize monetary policy after years of ultra-loose policy. Japan’s government and BOJ have been in step on recent rate decisions, despite ongoing debate about the pace and extent of further tightening. But uncertainty over future moves has dampened confidence in sustained yen strength.
Business leaders worry that the weak currency ultimately fuels inflation by increasing the cost of imported goods and services. Small and medium-sized enterprises are particularly vulnerable, as they often buy raw materials overseas and cannot easily pass costs on to consumers. These rising expenses hurt profit margins and create uncertainty over hiring and investment plans.
Households are feeling the pinch too, with everyday goods and utilities becoming more expensive. Many Japanese families rely on imports for food, fuel, and technology, and a weak yen directly translates into higher prices at the checkout. Business lobby chiefs said this pressure has contributed to a sense of economic unease among ordinary citizens this winter.
Japan’s last major currency defense occurred in July 2024, when authorities intervened to buy yen after it hit a 38-year low. That move aimed to curb excessive volatility and protect market confidence. However, with the yen still languishing near troubling levels, speculation about further intervention remains alive among investors and policymakers.
Prime Minister and BOJ officials are watching market reactions closely as they balance inflation targets with exchange-rate stability. A stronger yen could help ease imported inflation and reduce pressure on consumers and businesses, but may also slow export growth that has underpinned Japan’s trade surplus.
Firms and government voices now call for coordinated monetary and fiscal steps to restore confidence. Business representatives said policymakers need to consider measures that support small businesses and households, not just exporters. They want to see strategies that encourage sustainable currency strength and broader economic resilience.
As Japan begins 2026, debates over currency policy and economic priority will remain central. With inflation lingering above target and external pressures on the economy, stakeholders say decisive action on the yen could shape growth and living standards in the year ahead.
