Bank of Japan's quarterly Tankan report released on Friday showed the headline index for big manufacturers' sentiment in March stood at plus 6, down from up 12 seen three months ago as compared with the median estimate of +8 in a Reuters poll of economists.
Weak Tankan readings would pressure BoJ to take further actions in the upcoming meeting on April 28. Also, there are speculations that BoJ would lower inflation forecast for the coming two fiscal years at a quarterly review. Following the release of the Tankan survey, the yen strengthened by as much as a quarter of a percentage point to Y112.29 per dollar.
“The pronounced drop in the headline index of today’s Tankan survey underlines that the recent strengthening of the yen has damaged business confidence and suggests that the Bank of Japan will announce more easing later this month,” said Marcel Thieliant at Capital Economics.