TOKYO- Nearly half of Japanese firms find the yen’s slide beyond 155 to the dollar harmful to their business, roughly double the percentage of those who see the currency’s weakness as a positive, a Reuters survey showed on Thursday.
The yen, under pressure from a wide gap between interest rates in the United States and Japan, plunged to a 34-year low of 160.245 yen a dollar late last month. But it has since recovered some ground to around 156.36 after suspected rounds of intervention by Japanese authorities.
More than a third of Japanese companies want the Bank of Japan to raise interest rates further in response to the yen’s softer trend, the survey also showed, indicating they are willing to face higher borrowing costs to support the currency.
The yen has lost roughly 10 percent against the dollar so far this year despite the BOJ’s decision in March to end eight years of negative rates.
The poll showed 16 percent of respondents regarded the yen’s fall beyond 155 per dollar as greatly negative to their operations and 32 percent saw it as somewhat negative, while a combined 25 percent said it would be either greatly or somewhat positive.
“I very much fear Japan’s consumer market might contract (due to a weak yen), and that we might get used to it,” one manager at a food company wrote.
The weak yen has become a headache for policymakers by cooling consumption. While a boon for exporters and inbound tourism, it increases import costs, adds to inflationary pressures and squeezes households.
The survey showed 37 percent of respondents wanted the central bank to raise interest rates again to counter the yen’s weakness, while 34 percent wanted the government to intervene in the foreign exchange market to stem the currency’s decline.
Thirty percent of companies polled by Reuters said the range of 140-149 yen to the dollar is desirable for them and 28 percent said the 130-139 yen range is ideal, while no firms regarded the yen trading below 160 yen to the dollar as favorable.
To guard themselves against the yen’s depreciation, almost two-thirds of the respondents are looking into raising prices of their products, while 16 percent are considering switching to the domestic procurement of parts and raw materials, the poll showed.
