Why is an appreciating yen bad for Japan?

Japan's economy is export-dependent. One yen right now = one cent in US dollars; so 100 yen = $1.00. The US$ is the global payments currency. Nations are paid dollars for their exports, and nations pay dollars for their imports. read more

If the yen is at US$.01, then for every $1.00 of export earnings the exporting business will earn 100 yen. But if the yen doubles to US$.02 in fx value against the dollar, then for every $1.00 of export earnings the business will earn only 50 yen. read more

Japan is a large country driven by export-orientated economic growth, but, surprisingly, the yen is not used broadly in trade invoicing among Japanese exporters. Given most of Japanese trade is invoiced in US dollars, the recent appreciation of the yen to above 80 yen per dollar is a serious problem for the Japanese economy, and threatens exports and GDP growth. read more

As you can imagine, the sharp appreciation of the yen during the 10 years after the Plaza Accord and the exchange rate volatility that followed forced many Japanese manufacturers to reconsider their export model of build in Japan and sell abroad. read more