The Organization for Economic Cooperation and Development said that Japan's economy, the third largest worldwide economy after the US and China, will shrink 0.5% in 2011, mostly because of yen's rise.

An auto industry group official said that the yen's appreciation could result not in a mere hollowing out of the Japanese car industry, but a full collapse, as the yen is far too strong for companies to endure just by cutting costs.

But now the Japanese bank intervened with finance minister Mr Jun Azumi saying authorities would continue to intervene until they were satisfied.

Mr Azumi argued that the continued rise in the yen had been speculative and did not reflect the fundamentals of the economy.

Japanese companies have become more cautious since the value of the yen has gone up, causing the prices of exports to increase. In 1995, Toyota built 1.3 million vehicles abroad, but by 2009, that number had reached 3.7 million, with production in Japan shrinking to 3.5 million cars.

But now the largest Japanese automaker is considering moving production of the Korean market 2012 Camry to its plant in Georgetown. This move would allow Toyota to sidestep costly import taxes, while also spending less to build the car, despite the longer shipping distance.

Mr Akio Toyoda VC of Japan Automobile Manufacturers Association said that Japan's auto production could collapse with the yen' continued strength. He added that "It's not just a hollowing out, Japan's production could collapse."

Honda said on October 5th 2011 that it will reduce exports to as little as 10% of domestic production, from 34% in 2010.

(Sourced from www.inautonews.com)