Japan's H1 Exchange Rate-Related Bankruptcies Hit Highest Since 2022
Claire Weston
In the first half of 2026, 45 Japanese firms went bankrupt directly due to yen weakness — up over 30% year-on-year and the highest since tracking began in 2022. Rising import costs are pushing smaller companies to the brink.
What do 45 bankruptcies tell us?
Tokyo Shoko Research data show 45 companies failed in January–June 2026 due directly to the weak yen, up more than 30% year-on-year.
That is the highest figure since the firm began tracking yen-linked bankruptcies in 2022.
This means → the falling yen is no longer just a market number — it is forcing real businesses to shut down.
Which industries are hit first?
Failures are concentrated in wholesale — firms that import goods and resell them domestically are most exposed.
A case in point: Tokyo importer Merry Time Foods, which sourced crab, shrimp and tuna from elsewhere in Asia, filed for bankruptcy in May citing yen-driven profit erosion and political instability in supplier countries.
In plain terms = the cost of buying abroad rises with the exchange rate, but selling prices at home barely budge — margins get squeezed from both sides.
Tokyo Shoko Research expects yen-linked failures to stay elevated among wholesalers, retailers and manufacturers with limited pricing power.
Why does the yen keep falling?
The yen recently hit a 40-year low, touching ¥162 per dollar.
The root cause: the U.S. raised rates aggressively to fight inflation while Japan held negative rates to escape deflation, widening the interest-rate gap between the two countries.
In plain terms = money flows to where interest is higher — U.S. rates are high, Japanese rates are low, so capital leaves Japan and the yen drops.
Although the gap has since narrowed, a strong dollar and Middle East conflict pushing up oil prices continue to weigh on the yen.
Can rate hikes save smaller firms?
Tokyo Shoko Research manager Yoshihiro Sakata said: "The weak yen is one factor, but combined with inflation and rising labor costs, it is placing a cumulative burden on businesses."
The bankruptcy data also strengthen the case for the Bank of Japan to keep raising rates — narrowing the gap with U.S. rates would support the yen and ease import-cost pressure.
This reflects a dilemma: higher rates shore up the currency but also raise borrowing costs, and smaller firms already face wage inflation driven by labor shortages and limited room to raise prices in a fiercely competitive market — leaving them far more vulnerable than large exporters.
Content is for reference only, not financial advice.