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The
survey is an indicator of companies foreseeing good conditions
minus those feeling pessimistic.
Higher fuel prices due to the Iran war have added to
inflationary pressures in Japan, though crude oil prices have
fallen since the U.S. and Iran agreed on an interim deal to end
the war.
Although a weak yen raises the value of exports’ earnings when
converted into yen, a boon for Japan’s giant exporters, that
positive is starting to be countered by the big negative of
rising energy prices.
Japan imports nearly all of its oil and gas, and the yen’s
recent decline to near a 40-year low has added to those concerns
given recent high oil prices.
The U.S. dollar was trading at about 162 yen on Wednesday.
Last month the Bank of Japan raised its benchmark interest rate
to 1%, a three-decade high, citing challenges stemming from a
weak Japanese yen and higher prices. The central bank has been
trying to normalize monetary policy lately after decades of
keeping interest rates near or below zero.
Analysts say Japan's economic indicators, such as investments,
remain relatively strong despite longer term problems such as a
chronic labor shortage due to an aging and declining population.
“Sales remain firm, especially for large enterprises, but
profits are expected to weaken,” said Amova Asset Management
Chief Global Strategist and Chief Economist Naomi Fink said
about the tankan.
“Fixed investment plans are strong for large and mid-size firms
but less so for small firms.”
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