(Aug 1): Japanese trading houses said the central bank’s decision to raise interest rates is positive for their domestic businesses, because it signals improvement in the economy, as they released quarterly results.

Marubeni Corp sees limited impact on capital procurement costs from the Bank of Japan’s (BOJ) decision to tighten policy, chief financial officer Takayuki Furuya said during an earnings press conference on Thursday. Stable growth in an environment with “appropriate inflation” is a positive for the company’s domestic business, he said.

The weak yen had helped propel profits to record highs at Japan’s trading firms, which have sprawling portfolios abroad that include oil and gas assets doing business in US dollars. Executives at the companies this week have been brushing off the impact of a stronger yen on their profit outlook.

The BOJ decided on Wednesday to raise rates for the second time this year. The US Federal Reserve’s signalling on rate cuts also led to the yen strengthening against the dollar. Marubeni has set its currency rate for the fiscal year ending in March at 140 per dollar.

Marubeni shares declined as much as 11% following the results, as the firm’s net income for the first quarter rose 0.9% year-on-year, missing estimates, and operating income fell roughly 2% from year prior.

Mitsubishi Corp, which announced earnings on Thursday, sees the yen strengthening as the gap between US and Japanese interest rates is expected to shrink, according to CFO Yuzo Nouchi. The company doesn’t see an immediate need to review its currency forecast, which is currently set at 143 per dollar, he added. The firm’s net income for the first quarter rose 12% from a year before, beating estimates.

The yen may move between 145 and 150 to a dollar, as the interest rate gap between the US and Japan shrinks going forward, said Mitsui & Co CFO Tetsuya Shigeta. He added that “a gradual strengthening of the yen is the best scenario”. Mitsui reported a higher-than-expected 9.2% jump in net income for the first quarter.

Sumitomo Corp, which announced earnings on Wednesday, echoed Marubeni’s sentiment. A rate hike symbolises economic recovery for Japan, and is a welcome and positive sign, said CFO Reiji Morooka. Sumitomo’s net income for the quarter ending in June fell 2.4% from a year prior, also missing analyst estimates.

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