(May 20): Japanese manufacturers would prefer to see the Bank of Japan (BOJ) prioritise stable currency markets as a bigger monetary policy focus than the pursuit of stable inflation and economic growth, according to a major corporate survey by the central bank.

Some 64% of 638 manufacturers said they want the BOJ’s policy to keep the currency market stable, according to the poll released on Monday. The survey was part of the bank’s review of its monetary easing policies over the past quarter century. Stability in prices and economy ranked second in terms of corporate priorities, having been selected by 54% of respondents.

The outcome indicates these businesses are growing increasingly cautious about the yen’s moves and their impact on profits, as the currency trades not far from 34-year lows.  

The results underscore governor Kazuo Ueda’s challenge after the currency dropped by the most among major currencies this year. A growing number of corporate executives have urged the central bank to take action to put a floor under the yen, which drives up costs of imported materials. Many companies say they aren’t able to pass on higher costs via price hikes.

The currency was traded around 155.70 on Monday afternoon in Tokyo, little changed from last week’s close. Japan’s benchmark 10-year bond yields hit the highest level in a decade on market bets for a rate hike sooner rather than later to support the yen.  

Non-manufaturers told a different story. While a weak yen generally hurts these firms via higher import costs, only 33% of the 1,618 respondents in that sector, or around a half the ratio among manufacturers, chose the stable currency as their preferred focus of policy. Their most favoured selection was a stable economy at 63%. Next was price stability. 

In April last year, after Ueda took the helm, the BOJ announced it would conduct a broad policy review spanning the previous 25 years in which it kept its policy settings easy. The bank is expected to report its results by late autumn this year.

Interest in the review has receded somewhat after the BOJ ended its negative interest rate and yield curve control programme in March. Some analysts had predicted the review would be the trigger for those shifts.