Confidence amongst Japan’s largest manufacturers at its lowest level in four years.

A strong yen reduces exporters’ profits and a faltering U.S. economy has slowed global growth, causing panic amongst Japan’s largest manufacturing companies.

The Bank of Japan’s Tankan index of manufacturer sentiment will slide for a second quarter to 12 points in March for the quarter and that the risk of recession and growing anxiety amongst the manufacturing arm of the economy has caused many economists to predict when the Bank of Japan will cut interest rates.

The yen is currently at a 12-year high against the dollar last week, the US in the country’s largest market for its exports and that relationship has dropped for five months straight and record oil prices have only accentuated the problem.

Yesterday’s government survey revealed that the big manufacturers are the most pessimistic they’ve been since the initial report back in 2004.

Japan’s biggest carmaker Toyota indicated last week said the company may miss its sales target this year because the yen’s gains make its cars more expensive overseas as well as the rising cost of raw material such as steel denting their profit margins.

Vice President Tokuichi Uranishi said last week. Japan’s wholesale prices rose at the fastest pace in 27 years and that : “the rapid fluctuation of the currency and the surge in materials costs are headaches for us.”

Story link: Confidence amongst Japan’s largest manufacturers at its lowest level in four years.