Japanese Bankruptcies Linked to Weak Yen Rise to Record: Economy

Japanese corporate bankruptcies linked to the yen’s slide rose to a record, highlighting strains on small and medium-sized companies as Prime Minister Shinzo Abe campaigns for re-election on his economic strategy. Forty-two of the companies that failed in November cited the weaker currency as a contributor, bringing the total number of bankruptcies associated with the yen this year to 301, almost triple that of the same period in 2013, according to a survey by Teikoku Databank Ltd. It said surging costs of imported food, metals and construction materials squeezed small companies. The yen broke through 120 per dollar yesterday for the first time since 2007, as Abe’s handpicked central bank chief pumps a record amount of funds into the economy to stoke inflation. While some small firms struggle to pass on higher costs of imported materials to customers, large exporters are reporting higher profits and the total number of corporate failures is in decline. “Business conditions for small and medium-sized companies are severe,” said Norio Miyagawa, an economist at Mizuho Securities Co. “The more the yen weakens, the more the drawbacks will become evident, unless the benefits big companies are seeing spill over to consumption through an increase in wages.” The yen traded at 120.08 against the dollar at 1:32 p.m. in Tokyo, after touching 120.25 yesterday, a level unseen since July 2007. The currency has lost 28 percent since Abe took office in December 2012. By Keiko Ujikane

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