(Bloomberg) -- The mood among Japanese merchants fell in April to the lowest in 20 months as concerns mounted over the weak yen’s impact on imports and consumers.

A gauge of sentiment among store managers, taxi drivers and others who deal directly with Japanese consumers slid 2.4 points to 47.4 last month, the Cabinet Office’s Economy Watchers survey showed Friday. That was the lowest reading since August 2022. 

A reading below 50 indicates pessimists outnumber optimists. Analysts had forecast a resumption of faint optimism at 50.3. A measure of the outlook also deteriorated, declining 2.7 points to 48.5, the lowest since December 2022. 

The survey showed diverse effects of the weak yen on the economy. It’s driving up the cost of imported materials, fueling concerns that will lead to price hikes and weigh on consumption. At the same time, the drop in the yen is boosting demand among inbound tourists and the competitiveness of manufacturers against overseas rivals, according to the survey. 

Read more: Japan’s Households Cut Outlays With Inflation Still Sticky

The Bank of Japan is closely watching the yen’s impact on prices and consumption as it mulls its policy path after raising interest rates for the first time in 17 years in March. With workers set to get the biggest wage hikes in three decades this year, the central bank expects consumption to pick up. 

The yen’s weakness can derail that scenario by reviving cost-push inflation via higher imports. The currency was around 155.67 against the dollar Friday afternoon in Tokyo after briefly breaching the 160 mark last week for the first time since 1990. BOJ current account records suggest Japan spent around ¥9.4 trillion ($60.5 billion) in markets last week to prop up the yen in two interventions.

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