The Japanese Yen weakened against the majority of its most traded peers on Monday after data showed that the Japanese trade deficit widened in July to double the figure recorded in the previous year, as a weak Yen boosts the cost of imports.
Despite the doubling of the deficit Monday’s trade data highlighted that Prime Minister Shinzo Abe’s policy of easing the value of the Yen appears to be working as exports out of Japan soared by the fastest rate in three years. Increasingly strong sales of cars and electronic goods to the USA, Europe and Asia highlighted the recovery being seeing in the global economy.
The data showed that the trade deficit is the third largest on record standing at 1.02 trillion Yen in July due to the weak Yen and rising price of oil made imports of energy and commodities rise.
“As a trend, exports are recovering and will keep growing because the positive effect of the weak Yen will strengthen in coming months,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute in Tokyo.
“Hopefully that will offset risks, notably the possibility that China’s economic recovery will remain weak.”
Imports rose by 19.6% in July, the biggest gain in three-years and more than the median estimate for a 15.4% increase, due to a jump in the cost of imports for crude oil and liquefied natural gas, the ministry data showed.
So far this year the Yen has plummeted by 11% against the US Dollar and as a result the Japanese trade position is expected to improve as a result and as the global recovery continues to make a recovery.
“The weakening of the currency will benefit the economy as it will help companies in the auto and information technology sectors. I’m not so concerned about the trade deficit because energy prices will fall sooner or later and export volumes will rise as the global economy improves” said Hiroaki Muto an economist based in Tokyo.
Current Japanese Yen (JPY) Exchange Rates:
The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 97.5780
The Pound Sterling/Japanese Yen Exchange Rate is currently in the region of: 152.6532
The Euro/Japanese Yen Exchange Rate is currently in the region of: 130.0923
The New Zealand Dollar/Japanese Yen Exchange Rate is currently in the region of: 79.4844
The Australian Dollar/Japanese Yen Exchange Rate is currently in the region of: 89.8547
(Correct as of 10:45 am GMT)