Nearly Half of Japanese Companies Hit by BOJ Rate Hikes
Alina Collins
A Reuters survey shows roughly 49% of Japanese companies say BOJ rate hikes have hurt their business; with the yen at a 40-year low, firms face a double squeeze from rising rates and a weak currency ahead of the critical July 30–31 policy meeting.
Half of firms are hurting — how wide is the damage?
Reuters commissioned Nikkei Research to survey 511 Japanese firms; 218 responded anonymously. About 49% said rate hikes had a negative impact — 5% called it "significant," 44% said "to some extent."
46% reported no impact; only 5% saw a positive effect. This means → the winners are vanishingly few; the pain from tightening far outweighs the gains.
In plain terms = one in every two firms feels rate hikes are dragging on business, while only one in twenty says hikes actually help.
Will capex get scared off — where is the rate pain threshold?
Nearly one-third of respondents said capital investment has already been hurt at current rates.
Rate thresholds vary: 12% say capex would be curbed at 1.25%, 16% at 1.5%, and 27% only above 1.5%. This means → most firms still have some tolerance for higher rates, but the buffer is thin.
A transport-company executive wrote: it is hard to "normalize" away from a negative- or low-rate mindset when you must maintain existing facilities and push ahead with new investment at the same time.
When should the next hike come — why are firms so divided?
Preferences are scattered: 12% favor July–September, 27% October–December, 27% the first half of 2027, and 26% say no hike is ever welcome.
This reflects a deep split in how firms read the economic outlook — no single window commands majority support.
The BOJ's next policy meeting is set for July 30–31, less than three weeks after the survey closed.
The yen at a 40-year low — who is hurting, who is gaining?
55% of respondents said yen weakness is negative for profits; only one-third saw a positive effect. The yen touched 162.84 per dollar this month — a 40-year low.
In plain terms = a weaker yen looks good for exporters on the revenue line, but it drives up imported raw-material and food costs; add Middle East–driven oil-price spikes, and import-dependent firms get squeezed from both sides.
A food-company executive said bluntly: import costs have already risen, but raising product prices is difficult — "we are worried about the financial impact."
Should firms reset their FX assumptions — what is the "comfort zone"?
About 18% of firms are considering revising their dollar-yen assumption for the fiscal year through March; 5% have already done so; 48% have no plans to adjust.
Preferred rate ranges: 28% chose 140–149.99 yen, 27% chose 150–159.99 yen, and just 1% chose 160 yen or above. This means → the current exchange rate is already well beyond most firms' comfort zone.
The government spent a record ¥11.7 trillion (about $72.18 billion) on currency intervention from late April to early May, but the boost was short-lived and the yen resumed its slide.
Rate hikes plus a weak yen — what is the key thing to watch?
Mitsubishi UFJ Financial Group (MUFG) this week became Japan's most valuable company by market cap, lifted by expectations that higher rates will boost bank profits — a rare beneficiary in the tightening cycle.
This reflects a stark divergence: banks earn wider margins, while manufacturers and importers pay more to borrow and to source materials.
The BOJ's late-July policy decision will be the next critical test of corporate confidence and capex momentum.
Content is for reference only, not financial advice.