Yen blocked: Japanese currency hedging. (effect of currency fluctuations on Japanese exporters)

Economist (US), The, March, 1994

Many Japanese exporters lost a great deal of money because they did not anticipate the rise in the Yen during the first few months of 1994. Some exporters are now buying options to hedge against further increases. Changes to forward-currency contracts may also affect exporters.

EXPORTERS in Japan worry about the latest surge in the yen, which makes their products more expensive for foreign buyers. They are right to be alarmed. Swiss Bank Corporation calculates that every one yen rise against the dollar cuts exporters' profits by $100m. So why have big exporters not insured themselves against a domestic currency that has generally risen since 1985? The answer is that they have. They are just not very good at it.

Toyota, Japan's largest car maker, claims to hedge...

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