Business confidence among Japan's large manufacturers impacted by firm yen

Large Japanese manufacturers' business sentiment in September remained unchanged from the last quarter, as concerns continue about exports as the yen has remained firm and on wider concerns following Britain's decision to leave the European Union, the Bank of Japan (BOJ) said Monday.

In the central bank's quarterly Tankan survey, the index reflecting confidence among large manufacturers remained at plus 6, while that for large non-manufacturers dropped to plus 18 marking the third successive quarterly decline.

Manufacturers exposed to overseas markets cited the yen's protracted appreciation as denting profit outlooks as a firm yen negatively impacts overseas yields when they are repatriated as well as the companies' competitiveness in foreign markets, the central bank said.

The bank said expectations were for the dollar to trade at an average of 107.92 yen this fiscal year dropping from 111.41 yen pegged in the survey three months ago.

Along with concerns about the yen's appreciation was uncertainty among businesses about the global economic impact following Britain's vote to leave the European Union, although all manufactures said they planned to increase capital expenditure by 6.3 percent from the previous year, the BOJ survey also showed.

The BOJ's quarterly Tankan survey is regarded by economists as Japan's most closely watched gauge of business sentiment and the current diffusion indexes reveals the percentage of companies reporting unfavorable business conditions outweigh those reporting favorable environments.

(APD)