Yen Depreciation: A Significant Challenge for U.S. Companies Selling Services in Japan

Nov

Yen Depreciation: A Significant Challenge for U.S. Companies Selling Services in Japan

For U.S. companies offering services priced in Japanese yen, the ongoing yen depreciation poses a major challenge. Our company is among those affected, and we’ve taken some time to consider why the yen has remained weak for such an extended period.

What is Yen Depreciation?
First, it’s important to understand what yen depreciation means. It refers to the state where the value of the Japanese yen is lower compared to the U.S. dollar. Simply put, it reflects the currency market's preference for the dollar over the yen as an investment choice.

Currently, interest rates in the U.S. exceed 4%, while Japan’s rates remain below 1%. Given this significant difference, the choice of where to invest becomes clear. Many investors are opting to sell yen and buy dollars, a movement that is one of the main drivers of yen depreciation.

The Impact of Yen Depreciation
Yen depreciation drives up the cost of imported goods, resulting in higher prices and inflation. Japan is currently experiencing the effects of this phenomenon. Some may argue that Japan could counteract yen depreciation by raising interest rates, but there are reasons this approach is not feasible for the country.

Why Japan Can’t Easily Raise Interest Rates
If Japan were to raise interest rates, the cost of servicing its massive public debt would soar. This would strain the government’s finances, making it challenging to maintain public services such as social welfare and infrastructure. In other words, raising interest rates could risk pushing Japan toward fiscal insolvency.

Japan’s current low-interest-rate policy is a measure designed to keep debt servicing costs manageable for the government. This approach prioritizes maintaining fiscal operations over other economic factors. While it is not explicitly aimed at benefiting citizens, the collapse of government functionality would inevitably have severe consequences for public welfare. This delicate balance poses a significant challenge for Japan’s economy.

Conclusion: Resolving a Complex Problem Takes Time
Addressing yen depreciation would require raising interest rates, but that is contingent on achieving fiscal sustainability in Japan. However, fiscal reform takes time, meaning companies and citizens affected by yen depreciation will likely have to endure its effects for a while longer. Resolving this issue demands a long-term government strategy and structural reforms in the economy.

Understanding the background of yen depreciation and finding ways to adapt is essential for businesses to remain resilient in these challenging times.

Kenichi Uchikura
President / CEO
Pacific Software Publishing, Inc.
ken.uchikura＠pspinc.com
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ABOUT PSPINC

PSPINC (Pacific Software Publishing, Inc.) is a technology company based in Bellevue, Washington, USA. Founded in 1987, PSPINC provides web hosting, email hosting, and other internet-related services to businesses and individuals worldwide.

In addition to its hosting services, PSPINC also offers website design and development, domain registration, and online marketing services. The company has data centers located in the United States and Japan, and it offers multilingual support to its customers.

PSPINC has a strong focus on customer service, and it has received numerous awards and accolades for its quality of service over the years. The company is committed to staying up-to-date with the latest technology and industry trends in order to provide the best possible solutions for its customers.

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Ken Uchikura Newsletter Vol. 313 Happy Thanksgiving! The Holiday Sales Season Has Begun in the U.S.

Nov

Happy Thanksgiving! The Holiday Sales Season Has Begun in the U.S.

Tomorrow is Thanksgiving, one of the most widely celebrated holidays in the United States. It’s a day when families and friends gather to enjoy a festive meal, often featuring turkey as the centerpiece. And as soon as Thanksgiving is over, the largest shopping season of the year officially begins!

Black Friday and Cyber Monday
The day after Thanksgiving is known as Black Friday, marked by massive sales at shopping malls and online stores. Following closely, the Monday after Thanksgiving is Cyber Monday, focusing on online shopping deals.

In recent years, some shopping malls have started their sales right at midnight after Thanksgiving. After enjoying Thanksgiving dinner, many people head to the malls to participate in these late-night sales. It’s not uncommon to see long lines forming, even in the middle of the night, as shoppers try to snag popular items.

Then vs. Now: Changing Christmas Shopping Trends
In the past, many stores would hold sales and remain open even on Christmas Day. However, as the culture of prioritizing family time has grown stronger, more stores now choose to close on Christmas.

For example, Costco designates Christmas Day as a complete holiday, giving employees time to spend with their families. Similarly, major retailers like Target and Best Buy increasingly close their doors to celebrate the occasion.

On the other hand, online shops remain available even on Christmas Day, offering a convenient option for those who may have forgotten to buy a gift or are looking to treat themselves after the holiday.

Hot Deals to Look Out For

Electronics: Major discounts on TVs, smartphones, and laptops, with Amazon and Best Buy leading the charge every year.
Fashion: Clothing brands like GAP and Old Navy offer discounts of 50% or more.
Toys: Target and Walmart feature early-bird deals on toys for kids.
Midnight Mall Sales: Popular malls like Westfield and Simon Malls often start sales at midnight, creating a unique shopping experience.

Impact in Japan
In recent years, more shoppers from Japan have been taking advantage of these sales. Many U.S. online stores now offer international shipping, allowing Japanese customers to purchase discounted items directly. However, it’s important to be mindful of shipping fees and customs duties.

Interestingly, we're also starting to see Japanese stores holding their own Black Friday sales despite Thanksgiving being a U.S. holiday.

Thanksgiving is a day for showing gratitude to family and friends, but the day after is often about finding the good deals and treating oneself. Do you have anything you have your eyes on for this year’s sales?

Wishing everyone a wonderful Thanksgiving and an exciting shopping season!