“The first wave” of Brexit jitters hit Japan, says Anjani Trivedi in The Wall Street Journal. The yen, seen as a safe haven by investors, posted its biggest move against the dollar since 2008. It has now almost fully recovered its losses since 2012’s launch of Abenomics, the attempt to jump-start growth under Prime Minster Shinzo Abe.
The yen jump sent stocks plunging as it threatens the earnings of the market’s heavyweight exporters, says Lex in the Financial Times. According to JP Morgan, the operating profits of Japan’s car manufacturers will slip by 17% if the yen stays around current levels. Nissan and Honda make up to 80% of their sales abroad.
The strong yen is making the Bank of Japan’s reflation campaign much harder. It may now step up the pace of its money-printing programme, and take interest rates even further into negative territory. But the last time it did the latter, the yen actually strengthened, so it may have to come up with even more radical measures to weaken it. Brexit has presented the Bank of Japan with a choice, concludes Trivedi: “go big or go home”.