TOKYO, Jan 16 - Most Japanese companies are concerned about the impact of a stronger yen on the economy if the dollar was around 100-105 yen over the medium term, a survey by the Ministry of Economy, Trade and Industry showed on Friday. The average break-even level for the survey's respondents, which are mainly large manufacturers, was 111 yen per dollar, the survey showed. That compared with 113 yen in the previous survey conducted in October. In the previous survey, most companies were worried the economic recovery could be undermined if the yen stayed stronger than 110 yen to the dollar for too long. "Compared with the October survey, more firms are saying that there is some impact from the yen's rise," a METI official said.
The dollar fell to a three-year low of 105.90 yen last week, when Japanese authorities are believed to have intervened heavily in the currency market. The greenback was trading at around 106.09/14 yen on Friday afternoon in Tokyo. METI said 77 firms were surveyed in 11 sectors on January 8, 9 and 13, when the dollar hovered at 106-107 yen. The dollar was slightly weaker than 110 yen when the October survey was conducted. Eighty percent of the respondents said that if the yen stayed at 100-105 yen over the medium term, "it would worsen export earnings and affect corporate profits and capital expenditure plans".
Sectors such as electrical and general machinery were already seeing foreign exchange-based losses, the survey showed. At the same time, around 80 percent of the respondents had locked in their foreign exchange exposure by using forward contracts. Many of the those firms had made such transactions over the next three months. In addition, some respondents said the euro's recent rise had partly offset the damage from the dollar's fall against the yen. Still, about half of exporters' earnings are dollar-based, compared with around 10 percent for the euro, so the impact is somewhat limited, the METI official said. Separately, Finance Minister Sadakazu Tanigaki said on Friday that large Japanese firms were dealing with the stronger yen but smaller ones were struggling. METI is conducting a separate survey focusing on the impact of the rising yen on small and medium-sized firms.///