NEW YORK (TheStreet) -- Toyota (TM) and Honda (HMC) are among those Japanese companies having a happy holiday thanks to a yen that has fallen to a five-year low against the U.S. dollar, resulting in cheaper exports to America. Items priced in yen are now selling at the biggest discount since late 2008 based on the currency conversion rate.
When Prime Minister Shinzo Abe entered office in 2012, his strategy for economic growth, dubbed "Abenomics," focused on weakening the yen through the massive purchase of bonds by the Bank of Japan. That is much like the Federal Reserve's quantitative easing. Basic economics at work: The more supply without increasing demand, in this case the yen, the less it is worth over time. It has obviously worked for the Japanese yen.
The recent policies of the Federal Reserve have also helped the Greenback rise against the yen.Around the time the Fed decided to reduce its quantitative easing last week, the Bank of Japan voted unanimously at its a two-day meeting to maintain its current level of easing, making for a bullish future for Japanese exporters.
About the effects of the declining value of the island nation's currency, Governor Haruhiko Kuroda, the governor of the Bank of Japan, stated after the vote, "The correction of an excessively strong yen has been a plus for Japan's economy."