TOKYO (MNI) - Japanese machine tool makers on Thursday strongly urged the government to take steps to address the strength of the yen exchange rate, which is hurting their businesses.

"The ongoing yen appreciation will have a direct (negative) impact on the profits of machine tool makers," said Yoji Ishimaru, president of Japan Machine Tool Builders' Association. "(I) would like (the government) to take all possible measures to address the yen's appreciation."

Overseas demand accounts for about 70% of overall orders for machine tools made in Japan, so this sector is particularly sensitive to the yen exchange rate. Machine tool makers' business plans assumed that the U.S. dollar would average Y81.92 during fiscal 2011, according the BOJ's tankan quarterly survey, but the U.S. dollar is now trading below Y79.

Despite the strong yen, order for Japanese machine tools have remained strong.

Overall orders for machine tools for June stood at Y128.6 billion, the highest level since Y132.8 billion marked in May 2008.

"It is highly possible" that overall machine tool orders in calendar year 2011 will be above the Y1.1 trillion projected by the institute, said Ishimaru.

But the strong yen, concerns about stable power supplies in Japan, high oil prices, and economic conditions in China have created a great deal of uncertainty about the outlook for the second half of this year, he warned.