FALLOUT FROM YEN COMING

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, April 14, 1993                   TAG: 9304140026
SECTION: BUSINESS                    PAGE: B6   EDITION: METRO 
SOURCE: Associated Press
DATELINE: NEW YORK                                LENGTH: Medium
FALLOUT FROM YEN COMING
Ripples from the Japanese yen's surge against the dollar are expected to reach U.S. consumers soon, forcing slightly higher prices for cars, VCRs, cordless phones and other Japanese-made products.
Leading Japanese consumer electronics makers including Sony, Panasonic and Toshiba said Tuesday that prices could rise on selected products by fall, the result of the yen's 10 percent advance to record high levels in recent months.
But while the yen's appreciation may mean higher prices for American shoppers, a strong Japanese currency typically helps the U.S. economy overall. As the prices of imported Japanese goods rise, consumers are more likely to seek out lower-priced products made at home.
With one round of midyear price increases just ended, automaker American Honda on Monday raised Honda and Acura prices an average $202 per vehicle. It's unknown when or whether other Japanese automakers will follow, but it's clear the strength of the yen vs. the dollar is affecting all automakers.
However, it takes time before all the currency fluctuations are translated onto price tags. "The financial markets make instantaneous adjustments, but goods and services take a little longer to adjust" in terms of price, said Marc Chandler, an analyst with the advisory firm IDEA.
Indeed, it has taken the yen about three months to advance 10 percent to its current level. The dollar ended Tuesday's trading in New York at 133.40 yen.
Among smaller-ticket items, prices on television sets are unlikely to change, because many Japanese companies assemble their TVs in the United States. But many VCRs, camcorders, telephones and some personal computers are imported from Japan and are likely to be affected.
Rick Clancy, a spokesman for Sony Corp. of America, said prices will rise "on a selective basis, on a case-by-case basis." But while the increases will vary in size, he said it is unlikely any would approach 10 percent.
Consumers may have difficulty pinpointing the increases. New electronic products are introduced in the spring, and many consumers simply expect the latest gadgetry to cost more.
"It is inherent that some of the new products introduced will be at higher prices" because of the yen, Clancy said.
Also, Japanese manufacturers have ways of holding the line on price increases despite currency fluctuations. When the yen advanced sharply in the late 1980s, IDEA's Chandler noted, Japanese companies put the squeeze on their profit margins in order to keep prices stable.
"They didn't pass along higher prices to the consumer in order to maintain market share," Chandler said.
But with Japan's economy in recession, it is unlikely Japanese companies will be willing to crimp profits again. And as the U.S. economy continues to strengthen, Japanese manufacturers are likely to figure that Americans will have more money to spend.
Mike Kitadeya, a spokesman for Matsushita Electric Corp. of America, a unit of Panasonic Co., said his company sets exchange rates for wholesale buyers that remain in effect for as long as six months. So some buyers may not see price increases before fall.
"Right now we have no specific plans" to raise prices, Kitadeya said, though he conceded "it's probably going to happen" on some products.

by Bhavesh Jinadra by CNB