BoJ tankan shows Japan business optimism despite weak yen and oil shock

The Bank of Japan's latest tankan survey showed business sentiment improving again. The upbeat reading came despite oil disruption, a weak yen and deeper structural strains.Tokyo,Oct 1, 2026 10:46 ISTThe Bank of Japan has given a positive assessment of the economy in its quarterly tankan survey, with sentiment among large manufacturers rising to 24 from 22. The closely watched survey also showed sentiment among large non-manufacturers slipping to 35 from 37, while the main business sentiment indicator improved for the sixth straight quarter.The latest reading comes even as Japan faces major pressures, including higher oil prices, a weak yen and rising import costs. The central bank has raised its benchmark interest rate twice this year, in June and September, taking it to 1.25 per cent, its highest level in three decades, as it tries to normalise monetary policy after years of near-zero or negative rates.The survey measures the number of companies expecting good conditions against those feeling pessimistic. Its latest findings are widely seen as an important indicator of the health of Japan's economy.The positive reading has come despite the impact of soaring oil prices. The war in Iran has effectively closed the Strait of Hormuz, through which resource-poor Japan had earlier received most of its oil imports. Brent crude is now trading at about USD 98 a barrel, down from nearly USD 120 earlier, but still above pre-war levels of below USD 70 a barrel. Although higher interest rates would in theory support a stronger currency, the yen remains relatively weak. The US dollar has been trading at nearly 160 yen, compared with around 110 yen five years ago, adding to the pressure from rising import prices. The Bank of Japan has said the weak yen and higher prices remain key challenges.Japan is also dealing with longer-term structural problems, including an ageing society, labour shortages and concerns about the economy's vitality in the years ahead. Overall, the tankan survey pointed to continued improvement in business sentiment, even as energy costs, currency weakness and demographic strains continue to weigh on the outlook. With PTI Inputs- Ends