Confidence among large Japanese manufacturers has risen from three months ago, providing data support for the Bank of Japan to raise interest rates in July

Forex Platform- Key data from Japan on Monday showed confidence among the country's largest manufacturers was up from three months ago, opening the door for the Bank of Japan to consider raising interest rates later this month.

According to the Bank of Japan's quarterly Tankan survey released on Monday, the confidence index of Japan's large manufacturing companies rose to 13 in the second quarter from 11 in Quarter 1. Economists had expected it to be flat.

The data also revealed that the confidence index for large non-manufacturing companies fell slightly to 33 in the second quarter from the highest level of 34 since 1991.

It is worth noting that the Tankan survey report is one of the important data released before the next policy meeting of the Bank of Japan at the end of the month.

A third of economists surveyed by Bloomberg expect the BoJ to raise interest rates at the meeting.

The yen tumbled to its lowest level since 1986 last week, prompting some analysts to warn of higher interest rate risks, and Kazuo Ueda, governor of the Bank of Japan, has pledged to closely monitor the yen's impact on inflation.

Monday's data reflected the resilience of most industries and raised the capital spending plan for the current fiscal year to 11.1%.

According to the Tankan survey, respondents have downgraded their expectations for the yen this fiscal year, and the average exchange rate of the yen against the dollar is currently expected to be 144.77.

The yen was trading around Y160.80 to the dollar in Tokyo early on Monday, having fallen to a low of Y161.27 late last week, its lowest level since 1986.

The weak yen has had a mixed effect on sentiment in Japan, helping exporters earn record profits and attract record numbers of foreign tourists, benefiting regional economies and retailers.

Meanwhile, small companies and households have been struggling to cope with rising costs of importing raw materials, fuel and food, with executives increasingly citing the negative impact of a weaker yen

Bank of Japan watchers were poring over Monday's Tankan survey as Mr. Ueda said that, based on the data, an increase in the policy rate ceiling of 0.1 per cent was "certainly" possible at the July meeting.