Japanese yen looks set to surge

TOKYO – It’s been a number of years since Japan Inc lost sleep over the yen exchange rate. Say what you will about Shinzo Abe’s reform regimen, but the prime minister kept the peace in currency circles.

As Abe heads for the exit, markets are buzzing about a stronger yen – a yen that tests the psychologically-loaded 100-yen-to-the-dollar level.

That could be an unspeakable blow to business confidence at a moment when Asia’s No 2 economy is springing multiple leaks. Japanese output is expected to have contracted by an annualized 21% or more in the April-June quarter.

Now, corporate Japan must brace itself and face up to a trifecta of reasons that suggest a stronger yen is on the cards. These three reasons are Abe’s departure, a US election going off the rails and the sudden arrival of one of the globe’s most celebrated value investors in Tokyo markets.