The pain of a tanking dollar is all too familiar to U.S. consumers. Since last summer, the greenback has lost nearly 20% against the Japanese yen. But Americans are not the only ones who are suffering from this ever-increasing imbalance.

All too recently, Toyota (TM ADR: NYSE) headlines were all about its struggle with GM for the top spot in the Stateside market. Now the top Japanese automaker is having an increasingly difficult time pedaling Corollas or TM shares for a profit.

But Toyota isn’t suffering alone. The Bank of Japan’s quarterly Tankan survey has fallen 42% quarter over quarter, indicating deteriorating sentiment among large Japanese manufacturers, and forecasting more downside for same.

What entices so many to love the Japanese yen and hate Japanese shares? It’s that old carry trade again. Incredibly low interest rates encourage borrowing in Japan and investing almost anywhere else.

Unfortunately for the Japanese (and fortunately for Taipan Trader readers who have already locked in 583% on Yen Fund calls), there is virtually nothing the central banks are willing to do about this, as they simply will not raise rates moving into the recession they are sharing with the U.S.

Adam Lass
Editor, Taipan Trader