Japan Business Confidence Improves Despite Weak Yen and Rising Oil Prices: BoJ Tankan
The Bank of Japan’s latest Tankan survey showed stronger business sentiment among large manufacturers, despite a weak yen, higher oil prices and long-term economic challenges.
Japan’s business confidence continued to improve despite pressure from a weak yen, higher oil prices and rising import costs, according to the latest Bank of Japan Tankan survey.
Sentiment among large manufacturers rose to 24 from 22, while confidence among large non-manufacturers slipped to 35 from 37. The main business sentiment indicator nevertheless improved for a sixth consecutive quarter, pointing to continued optimism among companies.
The positive reading comes as Japan faces higher energy costs and currency pressure. Brent crude is trading around $98 a barrel after previously approaching $120, remaining well above pre-war levels. Disruptions around the Strait of Hormuz have added to concerns for resource-dependent Japan.
The yen has also remained weak despite the BoJ raising its benchmark interest rate twice this year, in June and September. The rate now stands at 1.25%, its highest level in three decades, as the central bank continues moving away from years of ultra-loose monetary policy.
The dollar has been trading near 160 yen, compared with around 110 yen five years ago. A weaker currency makes imports more expensive, adding pressure on businesses and consumers.
Japan also continues to face structural challenges, including an ageing population, labour shortages and concerns about long-term economic growth.
For now, businesses appear to be keeping their optimism intact despite the economic pressure. Japan’s companies, apparently, have decided that one more crisis isn’t enough reason to cancel the quarterly confidence upgrade.
