TOKYO Signs are that most firms in export-driven Japan Inc, having got the weaker yen they craved, now want the currency to either stabilise or recover ground, rather than continue a slide that will increasingly raise their costs.
About half the Japanese companies in a new Reuters survey say the yen has fallen enough, just 15 percent want a further yen decline and more than one-third would in fact like to see the currency rebound from its 4-1/2-year lows.
At the same time, top officials in Prime Minister Shinzo Abe's half-year-old government -- who used to stress the urgency of reversing the yen's strength -- have also begun highlighting the downside of the yen's steep slide, such as higher imported-energy costs.
The yen has sunk 23 percent against the dollar and 24 percent against the euro since mid-November, when it became clear Abe was poised to win a general election and implement his aggressive plans to reflate the world's third-biggest economy and tame the Japanese currency.
The Reuters Corporate Survey found that 48 percent of the companies want the yen to stabilize around 100 to the dollar. Just 7 percent want the yen to weaken to 105 to the dollar and 8 percent to 110 yen.
By contrast, a full 29 percent would like the yen to strengthen back to 95 to the dollar and 9 percent would prefer a 90-yen level. The total does not add up to 100 percent due to rounding.
The results for manufacturers were similar to those for the full survey sample, showing that the weak yen is a two-edged sword, even for Japanese exporters, whose products are more profitable overseas thanks to the weak yen. That is because their imported inputs become pricier in yen terms as the currency falls. It also reflects a steady shift of Japanese manufacturing overseas during the strong-yen years, which means those companies get less benefit when the yen declines.
Separately, despite the big lift to markets from Abenomics and the Bank of Japan's massive monetary easing, Japanese companies remain cautious about plowing their recent profit gains back into their businesses or workers, the survey showed.
Asked how the BOJ's easing was affecting their strategy, just 13 percent said they planned to boost capital spending and 10 percent to boost wages or jobs. This result is in line with other recent government and private data.
The yen's fall has helped big exporters like Toyota Motor Corp and camera-and-printer maker Canon Inc.
Nissan Motor Co Chief Executive Carlos Ghosn said recently that at 100 to the dollar, the yen was back to "neutral" territory. But he expressed hope that it would weaken further to a "normal" level, such as its 15-to-20-year average around 110 to the dollar.
The transport-equipment sector of the Tokyo Stock Exchange's First Section, which includes carmakers, has rocketed 124 percent since Abe's mid-November debut, far outstripping the 75 percent jump by the benchmark Nikkei stock average.
By contrast, import-dependant pulp-and-paper stocks have gained just 10.3 percent and textile shares -- rare losers from Abenomics -- are down 6.6 percent.
"Sales have not grown because we raised prices due to a spike in costs caused by a weak yen," said a textile company in the survey, where firms offer comments on condition of anonymity. A pulp-and-paper maker said, "Demand is not picking up, and on top of it we are facing a rise in imported raw materials prices due to a weak yen."
Further declines in the yen's value would risk fanning fears that a global currency war could erupt through a series of beggar-thy neighbour devaluations.
Japan has so far avoided direct criticism from its trading partners in the Group of Seven industrial powers and the Group of 20 big economies by insisting that "Abenomics" aims at ending 15 years of deflation, not targeting a weaker yen.
But U.S. Treasury Secretary Jack Lew has put Tokyo on notice, saying earlier this month that while Japan's economic growth is to be welcomed, Tokyo should respect the "ground rules" of international currency agreements against manipulating exchange rates to seek export advantage.
Hours after the dollar broke above 100 yen, Economics Minister Akira Amari said on May 10, "The negative and positive effects of the yen's decline are in the process of coming into balance."
Asked again on a Sunday talk show about the appropriate level, he avoided a direct reply, saying he didn't want to become "today's top news," but added, "People say the excessively strong yen has corrected quite a bit. If the yen continues to weaken steadily from here, negative effects on people's lives will emerge."
His remarks helped pull the dollar back from Friday's high above 103 yen to trade around 102.50 yen in Asia on Monday, traders said.
Finance Minister Taro Aso, whose ministry runs Japan's currency policy, said on May 14 that the yen's decline has good and bad aspects, and that the government must craft measures to help companies hurt by a weaker yen.
Many private economists also think the yen has fallen enough.
Takeshi Makita, head of the Japan Research Institute, says a yen around 95-100 to the dollar would be appropriate. His centre reckons Japan's purchasing-power parity translates to a yen rate of about 97 to the dollar, while the International Monetary Fund's calculations put the figure at 100.50.
The dollar's rise above 95 should hurt Japanese consumption by electricity and gasoline prices, but for now that blow is being cushioned by the wealth effect of s surging stock market, Makita says. Importers are hurt by a yen weaker than 100 to the dollar, he says.
Yasuo Yamamoto, senior economist at Mizuho Research Institute, thinks the Japanese currency around 90 to 100 to the dollar is appropriate. In addition to import-cost inflation and objections from U.S. and European governments, he says, a weaker yen would hurt the profitability of Japanese non-manufacturers, like convenience stores and parcel-delivery services, which have been developing businesses overseas.
The Reuters Corporate Survey polled upper management at 400 companies capitalised at more than 1 billion yen each, of which 250 responded during April 26-May 15, the period when the dollar tested and finally broke above 100 yen for the first time in four years.
The firms are split evenly between manufacturers and non-manufacturers, and are not required to answer every question.
This poll compared with a previous one taken between November 20 and December 3, when the dollar was trading around 82 yen. More than three-quarters of the respondents then wanted the yen to weaken to or beyond 85 to the dollar.
The survey, conducted for Thomson Reuters by Nikkei Research, was taken alongside the monthly Reuters Tankan survey, which showed that manufacturers' sentiment turned positive in May for the first time in a year, providing further signs that Abe's expansionary policies have boosted confidence in the economy.