TOKYO - European currency swings loom as a double-edged sword for Nissan Motor Co., with the potential to help or hurt profits.
Up to now, it has been hurt. The yen has been strong against the faltering euro, which means fewer yen profits are booked for each euro taken in on the sale of cars exported to Europe.
Moreover, because Nissan's main European production is in England, it also suffers from the British pound's strength, which hurts exports to the Continent.
But that could change. C. Fred Bergsten, director of the Institute for International Economics in Washington, predicts that the euro will strengthen against both the dollar and yen this year.
Following the yen's approximately 20 percent gain against the dollar in 1999, he sees the euro rising about 10 percent against the yen and dollar this year.
Already, the yen has begun to weaken. The dollar recently rose to around 110 yen after trading around 105 yen since mid-September. If the pound were to weaken as well, that would be icing on the profit cake.
ING Baring Securities (Japan) Ltd. auto analyst Howard Smith saw the yen weakening 'quite a bit' against the euro this year.
'So foreign exchange rates will be a source of positive momentum for everyone,' he said. The pound will be flat against the euro, he predicts, so there will be no worsening of that cost problem.
'It would imply a very good year for the Japanese in Europe,' he said, especially as quotas on Japanese exports to Europe have just ended.
Other analysts weren't as quick to endorse that prediction.
Said Stephen Usher, Tokyo-based auto analyst for Jardine Fleming Securities (Asia) Ltd.: 'I've given up trying to guess currency rates.'