Three quarters of Japanese firms prefer a stronger yen: Reuters poll

Thu Sep 18, 2014 7:18pm EDT
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By Tetsushi Kajimoto

TOKYO (Reuters) - The yen's rapid descent to six-year lows against the dollar is starting to push beyond comfort zones for three quarters of Japanese firms, a Reuters poll showed, highlighting the potential for profits to be squeezed as import costs climb.

Japan struggled with a strong currency for much of the past decade, only gaining sustained relief from late 2012 as Prime Minister Shinzo Abe came to power and embarked on bold monetary stimulus.

But this past month, the yen has tumbled about 6 percent to trade around 109 yen against the greenback, pressured by growing expectations that the Federal Reserve will lift interest rates sooner than forecast and speculation that the Bank of Japan may have to ease further.

That decline now threatens to further boost the cost of raw materials and fuel at a time when the economy is straining from the impact of a sales tax hike.

"Our business is slowing due to a marked increase in the cost of imports caused by the weak yen," an executive at a textile manufacturer wrote in the survey. "Retail sales at department stores remain slack."

The Reuters Corporate Survey showed only 25 percent of companies prefer an exchange rate of 105 yen or weaker, with 47 percent seeing 100-104 yen as the most desirable range and 28 percent preferring a yen at 99 to the dollar or stronger.

Conducted for Reuters by Nikkei Research from Aug. 29 to Sept. 12, the survey polled 486 firms capitalized at more than 1 billion yen which responded on condition of anonymity. About 260 firms answered questions on foreign exchange.


A man and a woman watch outside at the lobby of an office building in Tokyo September 17, 2014. REUTERS/Toru Hanai