While the yen has weakened slightly over the past week as concerns about the impact of Brexit have faded, it is still around 20% stronger than it was at the start of the year. A stronger currency creates a headwind for the Bank of Japan’s efforts to boost inflation, not just by lowering import prices, but also in diminishing the foreign earnings of Japanese firms. Our analysis suggests that firms in the car and electronics industry are under most pressure, while companies in machinery, metals and chemicals should see a smaller drop in profits.
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