TOKYO -- Japan's carmakers are nervously watching Washington's budget battle and debt debate, because they could end up big losers in an extended shutdown or default.
Japan's brands were just starting to coast on comfortable yen-dollar exchange rates, after a four-year slog through record highs that torpedoed profits.
Now, the congressional impasse is unraveling all that.
Jitters about the economy have spurred a flight away from the dollar to safe-haven currencies, especially the Japanese yen. Indeed, the dollar has tumbled 3 percent against the yen since the beginning of September.
On Sept. 11, a dollar bought 100.22 yen. By Oct. 9, it had dropped to 96.94. That's bad news for exporters here, everyone from Toyota and Nissan to Mazda and Subaru.
The current rate isn't nearly as problematic as when it was around 76 in late 2011. But the trend is worrying. As the dollar's exchange rate drops, that gives Japan's carmakers less flexibility in pricing overseas by eating away at profit margins on models shipped to the United States from Japan.
It means less revenue booked in yen on the companies' profit-and-loss statements for every car sold in dollars. That hits their bottom line and inevitably will impact such items as investment in r&d, new plants and new products.
A wider worry is that Japan's entire economic revival plan, dubbed Abenomics after Prime Minister Shinzo Abe, is predicated on a weak, not strong, yen.
That could trigger a wider slowdown that would affect the entire Japanese industry.
Finance Minister Taro Aso weighed in this week, urging the United States to get its house in order. "If the debt ceiling problem worsens, it would affect the world economy," Aso told reporters. "We hope this problem will be resolved without delay."
If U.S. politics knock the dollar down long term, that could have serious repercussions. For now, Japan and the Japanese automakers are holding their breath.