Weak yen, a 40 year low, a bigger worry than BOJ hikes for many Japanese firms

Reuters survey data suggests the yen’s 40-year low is becoming a bigger headwind for Japanese corporates than Bank of Japan rate hikes. More than half of firms said yen weakness hurts earnings, as import costs, especially energy, rise amid elevated Middle East-related energy prices. The yen fell to about 162.84 per dollar earlier this month, despite a record 11.7 trillion yen intervention by Tokyo in spring. Nearly half of respondents also said BOJ tightening has had negative effects, but the survey indicates firms are more worried about currency weakness and its inflationary cost pass-through. The BOJ’s next policy meeting on July 30-31 will be closely watched for signals on further tightening and currency implications.