Moody's cuts Toyota credit rating on strong yen

Workers give the final check to Toyota cars
Image caption Toyota and other carmakers have been operating at reduced capacity since March's earthquake

Car giant Toyota has had its credit rating cut by the ratings agency Moody's on worries that the strong yen and rising raw material costs will hit profitability.

Moody's cut the car maker's credit rating one notch to Aa3 from Aa2.

The ratings agency, which had put Toyota under review in April, said further cuts remained a possibility.

Toyota has faced major disruptions to its supply chain from the 11 March earthquake and tsunami in Japan.

"Toyota's profit recovery during the period of its financial year to March 2013 will not be as strong as preferred due to its declining markets share in various regions, the strong yen and high raw material prices," Moody's said in a statement.

A strong yen makes Japanese exporters less competitive, and Toyota is a larger exporter than its Japanese competitors Honda and Nissan.

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