75% Of Japan Firms Say Yen Weakness Bad For Business
More than three-quarters of Japanese firms say the yen has declined to the point of being detrimental to their business, a Reuters poll found, with almost half of companies expecting a hit to earnings, Tetsushi Kajimoto reported.
Photo Insert: Firms are concerned that the weakening of the yen could lead to constraints on consumption and capital spending.
The results of the Reuters Corporate Survey are one of the clearest signs yet that much of Japan Inc is struggling with higher costs and worsening consumer demand caused by the yen's weakness.
The survey also showed almost 60% think the government should move quickly to restart nuclear reactors, evidence that higher energy costs - driven in part by the currency's slide - may be changing opinion on nuclear policy.
The currency fell to its lowest against the dollar in about 20 years on Wednesday, slumping past 126 yen. It has pared some losses and was trading at 125.6 yen on Thursday.
While yen weakness is often a boon for Japan's export-driven economy, at these levels companies are more worried about how it inflates fuel and raw material imports, which are already soaring due to the war in Ukraine. A decades-long shift to producing more goods overseas has also muted a weak yen's benefits.
"We see the surging energy and commodity costs that come with the weakening currency as a negative," one manager at a ceramics maker wrote on condition of anonymity.
"We are concerned that could lead to constraints on consumption and capital spending." Forty-five percent of companies said they find it hard to cope with the currency weakening beyond 120 yen, while 31% described 125 yen as their pain threshold.
This month's survey was conducted between March 30 and April 8, when the yen moved between 122 and 124 to the dollar. It polled about 500 large and midsize Japanese non-financial firms, of which around half responded.