The Financial Crisis: Yen's Surge Brings Bad News for Japan's Exporters
Japan's stock and currency markets dealt the world's No. 2 economy a heavy blow Friday. The yen surged, battering shares of Japan's top exporters as the country nears recession.</br></br>In Tokyo, the yen reached a 13-year high against even the rising U.S. dollar. In late afternoon trading Friday in New York, the euro was at 119.05 yen, a six-year low and down sharply from 125.12 yen Thursday. The dollar was at 94.6 yen.</br></br>A strong yen wreaks havoc on Japan's export-driven economy, eroding the value of Japanese companies' overseas earnings, and often making the price of those products more expensive in overseas markets. After seeing sales to U.S. and Europe fall, exporters have been hit again as sales to the emerging markets have started to falter.</br></br>Some experts warn that the Nikkei 225 Stock Average, which dropped 9.6% Friday, will tumble even further next week if Japanese exporters disappoint investors with poor results and outlooks, as the rising currency may lead many to do.</br></br>For Japan, the rising yen and falling stock market come at a particularly delicate time. Gross domestic product shrank in the April-June quarter and most economists are expecting it to contract again in quarter that ended Sept. 30, which would qualify as a recession.