Weak Yen Drives H1 Bankruptcies to Highest Since 2022
Taylor Wilson
Yen-driven corporate bankruptcies in Japan hit 45 in the first half of the year, up over 30% year-on-year — the highest since Tokyo Shoko Research began tracking the category in 2022. With the yen above 162 per dollar, at its weakest since 1986, import-dependent small businesses face a triple squeeze of currency, inflation, and labor costs.
What do the bankruptcy numbers actually tell us?
Tokyo Shoko Research data: 45 corporate failures in H1 were directly caused by yen depreciation, up more than 30% year-on-year.
This means → the weak yen is no longer just a number on a screen — it is killing businesses outright.
The hardest-hit sector is wholesale trade. Merry Time Foods, a Tokyo importer of crab, shrimp, and tuna, filed for bankruptcy in May — the direct cause was yen-driven margin collapse compounded by political instability in supplier countries.
Why are small businesses hit hardest?
Small importers face a triple squeeze: the weak yen pushes up input costs + labor shortages push up wages + fierce competition blocks price pass-through.
In plain terms = costs are rising on both sides, but these firms cannot raise prices — margins are being crushed to zero.
Tokyo Shoko Research manager Yoshihiro Sakata: "The weak yen is one trigger, but combined with inflation and rising labor costs, it is creating a cumulative burden on businesses."
How did hedging tools backfire?
Regional banks widely sold "knock-out options" to small importers — a type of FX hedge that automatically expires once the exchange rate hits a preset barrier.
This means → the weaker the yen gets, the more likely the hedge vanishes exactly when it is most needed. Firms are then forced to buy dollars on the spot market, accelerating the yen's decline.
ANZ estimates the remaining knock-out barriers cluster between 163 and 170 yen per dollar. If the yen keeps sliding, a significantly larger wave of triggers will follow.
Can a Bank of Japan rate hike fix the problem?
Q2 raw-material procurement price indices surged; the BOJ's producer price index has jumped month after month — these data points objectively support the case for further rate hikes.
The logic: raise rates → narrow the US-Japan rate gap → support the yen → lower import costs.
But the contradiction is clear: higher rates also raise borrowing costs for the very small businesses already under strain. In plain terms = the medicine for the currency may worsen the patient's condition. Whether the yen can find a balance between tighter policy and business stress is the central question for Japan's economy in the second half.
Content is for reference only, not financial advice.