The Japanese yen fell slightly against the dollar, after gaining ground for seven trading sessions. But the currency's appreciation is a major issue for Japanese companies who do business with the United States.
Throughout Asia, Europe and other parts of the world, the dollar's steep slide is worrying exporters. In the past three months, the greenback has fallen 11 percent on the Euro and 12 percent on the yen.
The dollar is the world's most widely used currency, and while its weakness may benefit companies that import American goods, exporters face lower profits as their products become more expensive to U.S. customers.
Nowhere is this more true than in Japan, where the country's recent emergence from a deep recession is tied to heavy trade with the United States the top overseas destination for Japanese products.
The yen was hovering just above 116 to the dollar in Tokyo, after rising to 115.54 Tuesday, its strongest level in 17 months. Finance Minister Masajuro Shiokawa said he monitors the situation closely and stresses that Japan's policy towards the currency has not changed.
Tokyo's view is that a weaker yen, about 130 against the dollar, is best for the Japanese economy. To halt the yen's rise, the Bank of Japan has sold $33 billion worth of yen since May.
But exporters, who contributed strongly to the first quarter's 1.4 percent growth rate, worry that the combination of a weak dollar and strong yen may suppress the nation's fledgling economic recovery by making Japanese exports less competitive overseas.
For instance, Nippon Mining and Metal, which refines copper and other metals, depends heavily on overseas sales. Company spokesman Nobuyuki Yamaki said his company imports raw materials and notes its business is dollar-based. So as the yen rises, revenue drops. He added that for this year, the company expected a weaker yen and now the situation is different
Many Japanese exporters say, if the nation's currency drops below 115 to the dollar, their export operations will not be profitable.