Japanese companies are extending foreign-exchange hedging horizons to as long as a decade as the yen’s prolonged depreciation erodes purchasing power and upends traditional risk-management practices.
The yen has lost more than 30% against the dollar over the past five years, making it the worst-performing Group of 10 currency. After touching a near 40-year low just shy of 164 per dollar in July, the currency has since stabilized around 159-159.34, though authorities have intervened multiple times—including rare joint U.S.-Japan purchases in July and August 2026. Market consensus now expects the dollar-yen rate to remain anchored between 155 and 165, with little appetite to push it materially below 150.
Takara MC Chief Executive Taku Ueno, whose firm imports U.S. beef, Spanish olive oil, and Italian tomatoes for its 43 supermarkets south of Tokyo, has shortened negotiation cycles for U.S. beef from monthly to quarterly and is pursuing direct contracts with suppliers lasting up to a year. "Japan is completely losing its buying power," Ueno said. "You have to go to suppliers in person and bow your head to make a purchase."
The shift reflects broader corporate adaptation. Nitori Holdings estimates that a 1-yen rise in the dollar-yen exchange rate reduces its profit by about 2 billion yen ($12.5 million). Smaller firms, which once absorbed modest import price increases, are increasingly turning to futures, forwards, and options to manage costs. Bank of America has expanded its Japan FX headcount over the past two years to meet surging demand for hedging solutions.
"Previously companies would hedge through banks just for a few months to a year," said Akira Hirayama, executive director in the product marketing department at Daiwa Securities. "Now there are cases where customers want to lock rates in for as long as five to 10 years."
Daiki Hayashi, head of Japan sales and marketing at J.P. Morgan, noted that while some domestic participants argue the tide in FX markets has turned, offshore investors remain skeptical. "The prevailing view is that no one intends to push dollar-yen materially below 150," he said. "So the dominant thinking in the market is that the 155 to 165 range is likely to persist."
Namato Nagahama, head of global FX sales at Bank of America in Tokyo, added: "Everyone is wondering whether the dollar-yen has peaked here, but no one knows what will happen next because companies have kept seeing the yen weaken even while people kept calling each level a 'key level.'"
