More than 60% of Japanese firms want BOJ policy to be lifted

A quarter of Japanese companies want the central bank to take action now, according to a survey by the Japanese government, and more than 60 per cent of the Japanese companies want the central bank to end its policy of monetary easing this fiscal year due to the weak yen.

Japan Inc backed the Bank of Japan policy less than a year ago, but this year's rapid slide in the yen has jacked up fuel and raw materials imports, which has not only affected corporate costs but also affected household spending.

The yen fell 14 per cent since the start of the year and hit a new low of 131.34 to the dollar this month.

Any weakening of the yen beyond 125 to the dollar is excessive and policymakers should take action in some way, including but not limited to hiking rates, a manager at a chemicals maker wrote in the monthly Reuters Corporate Survey.

Twenty-four percent of respondents said the central bank should abandon big-scale monetary stimulator by the end of September, while 23 per cent said by the end of the first half in September.

64 per cent want large-scale stimulus gone by March when the fiscal year ends, and that number jumps to 84 per cent for April when BOJ Governor Haruhiko Kuroda serves out his term.

While Kuroda said that the yen's moves have been rapid, he argues that a weak yen on the whole benefits the economy. In stark contrast to the shifts to interest hikes in other parts of the world, Kuroda said that the central bank would continue with monetary powerful easing given the impact of the pandemic and tepid inflation.

Of those who want to see a change in BOJ policy, 58 per cent want negative rates scrapped, 35 per cent want interest rates hiked and 25 per cent want to see the bank drop or change its 2 per cent inflation target. Multiple answers were allowed for this question.

The results from the April 26 -- May 13 poll of 500 large and mid-sized non-financial firms, which saw 230 firms respond, represent a major U-turn from July when the survey asked comparable questions about monetary policy.

At the time, 72 per cent of Japanese firms saw a positive impact from BOJ policy, with a majority saying ultra-low rates should continue for another 3 -- 4 years.

The decline in the currency has outweighed the benefits normally associated with a weaker yen, namely the inflation of profits earned abroad when repatriated and the ability to export more cheaply in the long term. Japanese exporters have continued to shift production abroad.

As the production shift continues, the impact on the economy is greater from higher raw materials costs and other imports from the weaker yen than the apparent increase in profits for exporters, said a manager at a retailer.

Respondents replied to the survey on condition of anonymity.

Some managers were withering in their criticism of BOJ policy, expressing concern that the weak yen could erode Japan's economic might.

One manager at a services firm wrote that the easing policy was nothing but a stupid plan that weakens national power.

The survey also found firms wary of boosting capital spending due to the impact of the weak yen and rising input costs. Nearly half of them plan to keep their business investment flat this fiscal year, while another 14 per cent expect it to decline.

The survey also showed that China's anti-COVID measures - including a lockdown in Shanghai -- have hurt nearly two-thirds of Japanese firms. Ten percent said they were having a big impact on business.

A chemicals maker manager said that the imports of China-produced parts have stopped putting downward pressure on car output.