A MAJORITY of Japanese companies considers the yen’s recent weakness a negative factor for their businesses, according to a recent survey.

About 64 per cent of firms surveyed said the recent depreciation of the yen has eroded their profits, while 7.7 per cent saw a positive impact, according to a report published on Friday (May 17) by Teikoku Databank. Companies citing adverse impacts said they were not able to pass on rising raw materials costs to customers via price increases.

About half of the surveyed companies said a yen trading around 110 to 120 to the US dollar would be appropriate. At midday in Tokyo on Friday the yen was trading around 155.8 to the US dollar.

Teikoku Databank’s report comes as officials and business executives including the head of the Keidanren business lobby and Bank of Japan (BOJ) governor Kazuo Ueda have ramped up their warnings about the yen. The currency’s recent sharp moves generated speculation that authorities intervened in the foreign exchange market to support it, with flows out of the BOJ’s accounts indicating two likely actions worth around 9.4 trillion yen (S$81.3 billion).

The report on Friday reflected responses from 1,046 companies, including both exporters and importers.

The interest rate differential between the US and Japan is expected to remain wide for some time even after the BOJ conducted its first rate hike in 17 years in March. That’s keeping downward pressure on the yen.

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While the weak yen has bolstered earnings at exporters including Toyota Motor, it has weighed on domestic activity. Household spending has fallen every month for more than a year as shoppers coping with rising costs of living tighten their budgets.

The currency is a “big problem”, Japan Airlines chief executive officer Mitsuko Tottori said earlier this month, adding that she’d like to see it retrace back to around 130 per US dollar.

Finance Minister Shunichi Suzuki has said the government is trying to mitigate the negative impact of the yen’s depreciation through policies including price relief measures. BLOOMBERG