Yen depreciation no longer guarantees Japan's export gains

Japan's weaker yen no longer reliably boosts exports because 36% of manufacturing is now produced overseas, where production and sales happen in local currencies insensitive to yen moves. Meanwhile, yen depreciation raises import costs, squeezing domestic corporate margins and driving bankruptcies to a 10-year high. If you manufacture in Japan and import raw materials, a weak yen is now your cost headwind, not your tailwind - Toyota and Nissan have already moved production overseas to escape this trap. The policy tool that worked for 30 years is broken; watch for Japanese founders to either move supply chains out or hedge currency aggressively.