The yen rises to more than a six-month high, putting pressure on profits for Japanese carmakers such as Toyota

The Japanese yen has risen to its highest level in over six months, putting downward pressure on profits for Japanese automakers such as Toyota, as some of their earnings forecasts are based on a weaker yen assumption. Toyota’s forecast is the most conservative, assuming a USD/JPY exchange rate of 160. In August, Toyota stated that for every 1 yen appreciation, its annual operating profit would decrease by approximately 50 billion yen (equivalent to $326 million). Exchange rate fluctuations present an uncertainty for Japanese automakers, highlighting the economic costs of currency volatility. A stronger yen will reduce the value of overseas earnings when repatriated, harming companies with substantial sales in the US and European markets. Currently, the yen is stronger than the forecast of all Japanese automakers except Nissan (Nissan expects the USD/JPY to be 150 for the fiscal year ending March 2027).