Japan Records Highest First-Half Bankruptcies Since 2022 Linked to Weak Yen

Forty-five Japanese companies filed for bankruptcy between January and June after citing the weak yen as a factor, according to a report by Tokyo Shoko Research published last Wednesday. The number rose more than 30 percent from the same period a year earlier and marked the highest total since the firm began counting currency-related failures in 2022.

The yen has declined steadily against the dollar in recent years as U.S. interest rates rose while Japanese rates remained negative. On Thursday the currency reached a 40-year low of 162 per dollar before recovering slightly amid speculation that Japanese authorities might intervene.

Bankruptcies were concentrated in the wholesale sector. Tokyo-based Merry Time Foods, an importer of seafood, filed in May after reporting that higher import costs and political instability in supplier countries had reduced profitability. Tokyo Shoko Research manager Yoshihiro Sakata said the weak yen is one contributing factor.

He added that combined with inflation and rising labor costs it creates a cumulative burden on businesses. Smaller firms that employ most of Japan’s workers have limited ability to pass higher costs to customers because of intense competition. They also face mounting wage pressures amid persistent labor shortages.

Some smaller importers used structured hedging products such as reverse knockout options sold by regional banks. Once the yen reaches a preset knockout level, the hedge expires and firms must buy dollars at prevailing market rates or enter new contracts.

Tokyo Shoko Research stated that currency-related bankruptcies are likely to remain elevated for some time, particularly among wholesalers, retailers, and manufacturers with limited pricing power.