TOKYO (AFP) - The precipitous plunge in the value of the yen in the past 18 months is an object lesson in being careful what you wish for.

After years of complaints by economic managers that the yen was too high and no one was buying Japanese exports, the currency is on a one-way charge to the bottom of the heap.

Three years after hitting the dizzy heights of 75 yen (82 cents) to the dollar as global investors poured into the safe haven currency, the Japanese unit is now plumbing seven-year lows beyond 120 to the dollar.

Massive - and recently expanded - monetary easing by the Bank of Japan has been responsible for driving down the yen, a trend that has accelerated in recent months as the Fed wound down its asset-purchase programme.

The price of Japanese goods abroad has fallen and exporting firms have seen their bottom line fattening nicely, driving up share prices.

Companies such as Toyota and Panasonic have celebrated as their coffers fill with cash, enough - maybe - to dish out the pay rises Prime Minister Shinzo Abe desperately wants workers to get if they are ever to start spending and help nurture the economy back to health.

With the dollar at 120 yen, compared with 103 a year ago, the main six automakers stand to collectively enjoy an additional 800 billion yen in operating profit for the year to March 2015, the Nikkei newspaper estimated.

And businesses catering to foreign tourists are seeing a boom, with the cheap yen encouraging an ever-greater number of high-spending foreigners to splash the cash.

But the rocketing price of imports like energy, food and raw materials have put the squeeze on consumers and businesses at home.

Where Tokyo was accustomed to making soothing noises to hard-hit exporters, it now finds itself drafting measures to combat high fuel prices that have hit truck drivers and fishermen.

The number of yen-linked corporate bankruptcies nearly tripled to 301 in the 11 months through November, according to Teikoku Databank, a corporate credit research firm.

"Further yen depreciation could do lethal damage to mid-sized and small companies which are barely surviving," the report warned.

Among those that have succumbed is now-bankrupt bag maker Fukai, among a slew of firms that struggled to pass on the extra costs to customers, which came as the sales tax rose from 5.0 per cent to 8.0 per cent in April, hammering consumer spending.

"In addition to losses in currency derivatives due to past strengthening of the yen... increased costs in imports due to a cheaper yen since the end of 2012 worsened its profitability rapidly," the Teikoku report said of the bag maker.

For struggling companies and hard-pressed consumers, it seems worse is yet to come.

Abe's Liberal Democratic Party is widely expected to bag an easy victory in this weekend's general election, meaning more of the same.

The US economic recovery should also fuel dollar-buying, economists said.

There is one factor cushioning Japan from the full brunt of the plunging yen - cheap oil.

Crude has struck fresh five-year lows, with US benchmark West Texas Intermediate for January delivery around $63 a barrel and analysts forecasting further falls owing to weak demand, a global supply glut and fewer production halts.

Even with its ever-larger need to import dollar-denominated fossil fuels - a legacy of the nuclear shutdown in post-Fukushima Japan - things are not as bad as they could be.

The impact of cheap oil on the economy at large is similar to a tax cut in Japan for now, said Ryutaro Kono, economist at BNP Paribas.

But - frustratingly for Abe - that is taking the wind out of price rises and putting his target of 2.0 percent inflation further beyond reach.

That, in turn, might lead the Bank of Japan to further extend its easing programme, which could further drive down the yen, Kono added.

If that happens "we will never enjoy the benefits of falling oil prices", said Kono.