Toyota seen worst hit among exporters by dollar drop

Toyota Motor Corp looks set to be hit the hardest among Japanese exporters by the dollar's tumble against the yen, having assumed what now appear to be the riskiest currency rates for the rest of its business year.                                           

Toyota, the world's biggest automaker, has assumed an average dollar rate of 90 yen for the October-March second half, compared with 85 yen at Honda Motor and Nissan Motor.

On Thursday, the dollar sank to a 14-year low of 86.29 yen , with exporters getting no reassurance from Japanese authorities, who repeated they had no plans to intervene to prop up the dollar.                                           

While the euro's relative firmness presented some relief, shares in exporters fell across the board to push the main Nikkei average down 0.6% to a four-month closing low.

Toyota lost 1.2%, slightly more than falls of 1.1% in Honda and 0.5% in Nissan, but better than Mazda Motor Corp, which fell 2.1%. The transport sector subindex lost 1.2%.                                           

"Carmakers that issued big profit warnings last year have set cautious forex assumptions this time, so roughly speaking the current rates are within expectations," Aizawa Securities auto analyst Toshiro Yoshinaga said.                                           

"But there are views that the dollar could sink even further in 2010, to the 70s (yen), and in that sense Honda and Nissan, which are relatively strong in emerging markets, are in the winning camp," he said.                                           

Toyota, which exported just over half of its Japan-made vehicles in the first nine months of this year, estimates that every 1-yen fall in the dollar would shave 30 billion yen of operating profit. Toyota is projecting an operating loss of 350 billion yen in the year to March.                                           

Electronics makers face similar difficulties, although analysts said current rates were still relatively manageable thanks to a resilient euro, now trading around 131 yen. "I don't think there''s too much to worry about," said JPMorgan Securities analyst Yoshiharu Izumi.

"Even with Sony, (which has a big forex exposure), they have some cushion left in the euro rate. I think they'll be okay at these levels." Sony Corp <6758.T>, which makes about 70 percent of its revenues outside Japan, is assuming a dollar of 90 yen and euro of 130 yen for the second half.                                           

Sony shares closed down 1.9%, while Panasonic Corp, which made 47 percent of its first-half revenues abroad, lost 1.7%.