Corporate Forecasted Exchange Rate Averages 147.87 JPY/USD, Most Companies Expect Late 150s; Gap with Actual Rate Narrows Slightly but Still Wide Amid Ongoing Yen Weakness

Since 2021, when the interest rate differential between Japan and the U.S. rapidly widened, the foreign exchange rate (yen-dollar rate) has trended toward yen depreciation. Although temporary relief occurred due to the Bank of Japan’s three interest rate hikes, which narrowed the interest rate gap, yen weakness has resumed amid energy supply concerns and rising oil prices driven by Middle Eastern tensions. While a weaker yen benefits inbound tourism and exports, it also sharply increases import prices for crude oil and other raw materials, driving up procurement costs and squeezing corporate profits.

When the nominal exchange rate assumed (set) by companies for financial forecasting significantly diverges from the actual exchange rate, it can greatly impact business operations and performance. This is particularly critical for small and medium-sized enterprises (SMEs), which often have limited pricing power and restricted access to foreign exchange hedging tools. In such cases, the gap between forecasted and actual exchange rates can affect profit planning, cash flow, and even corporate creditworthiness.

To address this, Teikoku Databank conducted a survey on corporate forecasted exchange rates, carried out alongside the TDB Economic Trend Survey for May 2026.

SUMMARY

For the 2026 fiscal year, the average forecasted exchange rate among companies was 147.87 JPY per USD, an 8.23-yen depreciation from the previous year’s May level (139.64 JPY). On a company basis, expectations are heavily concentrated in the late 150s, with 33.6% of companies forecasting '156–160 JPY', the highest proportion. While sectors such as 'Construction,' 'Retail,' 'Real Estate,' and 'Transportation & Warehousing' expect rates around the 144-yen range, 'Agriculture, Forestry & Fisheries' anticipates 156.60 JPY. Among direct exporters, large enterprises assume a rate 6.23 yen weaker than SMEs.

The survey was conducted from May 18 to May 31, 2026, targeting 22,749 companies nationwide, with 10,521 valid responses (46.2% response rate). The analysis focused on 2,290 companies that set a forecasted exchange rate. This marks the 10th annual survey on forecasted exchange rates since 2017.

Forecasted exchange rate averages 147.87 JPY/USD, revised over 8 yen weaker than last year

As of May 2026, the average forecasted exchange rate among companies stood at 147.87 JPY per USD. This represents an 8.23-yen depreciation from the 139.64 JPY recorded in May of the previous year.

However, on a per-company basis, expectations are skewed toward weaker yen levels. The median value—ranking companies from strong to weak yen assumptions—is 155 JPY, while the mode (most frequently cited rate) is 160 JPY. The average remains in the 147-yen range partly because 10.1% of companies still assume rates 'below 130 JPY,' pulling the average down.

In terms of distribution, 33.6% of companies expect '156–160 JPY,' the highest share. This is followed by 18.8% expecting '146–150 JPY' and 16.5% '151–155 JPY.' Approximately 70% of companies set their forecasted exchange rates within the 146–160 JPY range.

Companies expressed concerns about exchange rate volatility affecting sales and consumer sentiment. For example, a textile sleepwear manufacturer (forecast: 145 JPY) stated, 'If the exchange rate doesn’t fall to around 130 JPY, procurement costs remain too high, and no one will buy our products.' A design firm (forecast: 150 JPY) noted, 'Deteriorating exchange conditions, inflation, and war impacts are increasing costs and dampening consumer confidence.' Conversely, a real estate management firm (forecast: 150 JPY) welcomed the weaker yen: 'The lodging business benefits from strong inbound demand. We expect current exchange levels to persist, supporting continued performance.'

Industry differences in forecasted rates: 'Agriculture, Forestry & Fisheries' expects 156.60 JPY

By industry, 'Agriculture, Forestry & Fisheries' had the weakest yen forecast at 156.60 JPY, while 'Construction,' 'Retail,' 'Real Estate,' and 'Transportation & Warehousing' expected rates in the 144-yen range, reflecting relatively stronger yen assumptions.

The gap between the weakest-yen sector ('Agriculture, Forestry & Fisheries') and the strongest-yen sector ('Construction') reached 12.56 yen. Differences in import/export exposure, sensitivity to raw material and fuel prices, and pricing power likely contribute to these divergent expectations.

Companies engaged only in 'direct imports' assume an 8.14-yen weaker rate than those only in 'direct exports'

Among companies directly or indirectly involved in 'exports,' the average forecasted rate was 150.54 JPY. In contrast, companies engaged in 'imports' assumed a rate of 151.89 JPY—1.35 yen weaker than exporters. Notably, companies conducting only 'direct imports' (152.38 JPY) assumed a rate 8.14 yen weaker than those conducting only 'direct exports' (144.24 JPY).

By scale, large enterprises forecast 151.53 JPY, SMEs 147.84 JPY, and among SMEs, small-scale enterprises expect 146.25 JPY. Larger firms tend to assume weaker yen rates, possibly reflecting greater overseas transactions and more sophisticated foreign exchange management. Even among 'direct exporters,' large firms assume a rate 6.23 yen weaker than SMEs, indicating that both trade activity and company size influence exchange rate assumptions.

Overall, the 2026 forecasted exchange rate averaged 147.87 JPY/USD—over 8 yen weaker than the 139.64 JPY assumed in May 2025. Additionally, because import-only and export-only businesses face opposite profit impacts from exchange fluctuations, importers assumed a rate 8.14 yen weaker than exporters.

From 2017 to 2021, actual and forecasted exchange rates were closely aligned. However, from late 2021 through FY2025, actual rates remained significantly weaker than forecasted levels. Since April 2026, actual rates have hovered around 160 JPY, maintaining a gap of over 10 yen with forecasted rates. Meanwhile, the purchasing power parity (PPP)—an exchange rate reflecting economic fundamentals—remains around 106–108 JPY [1], suggesting medium- to long-term yen appreciation potential. The persistent gap between forecasted and actual rates continues to pose a risk of downward pressure on corporate earnings through import and export activities, warranting ongoing attention.

[1] Source: International Monetary Research Institute, 'USD/JPY PPP and Actual Exchange Rate,' April 2026 PPP (CPI-based)