Exporters from Germany Affected by Depreciation of Yen

By Marc Castro

May 11, 2013 11:58 AM EDT

The big exporters of Germany are facing a new difficulty from its Japanese competitors following the quick depreciation of Yen as against the Euro. The situation left investors with a hard decision to choose which provides high yields from amongst currencies.

In the middle of 2012, the Yen depreciated by thirty percent as against the Euro. A big part of that drop happened after Japan imposed drastic actions on fourth of April to save its economy. The action made Japanese products a lot more inexpensive giving a big difference to Germany who is the second biggest exporter globally following China.

Germany's gross domestic product went up to 41.5% in 2012 from 21.8% in 1992 as reported by the Federal Statistics Office. Any decline in the competition is possibly significant for the results of these statistics.

Based on the database of the United Nations Commodity Trade Statistics, Germany and Japan are big exporters of electronics, motor vehicles and industrial machinery.  Japan is the fourth in the world ranking of exporters and is always the major rival of Germany. The database showed that exportation of transport equipment and machinery is 50% of what Germany exports while the same goods is 58% of what Japan is exporting.

According to Didier Saint-George, a member of the investment committee at the French Fund Manager Carmignac Gestion, "Japanese companies have to decide whether to use the benefit to increase their market share or increase their profit margins. Depending on what they choose to do, companies that have their cost base in Europe could come under pressure.  We are looking at German companies we own in our funds and we're trying to see where there could be competition on prices."

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