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Japan's trade data highlighted loss of sizeable current account surplus - BTMU

FXStreet (Łódź) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ comments on the Japanese trade balance numbers for September released yesterday and showing a deficit of -958.3B.

Key Quotes

"We have our doubts that the yen would behave as a safe-haven currency and surge in value if there was a major risk-off event and this is based on the fact that the yen has lost some of its key safe-haven characteristics."

"The trade data today highlighted the loss of Japan’s sizeable current account surplus through the notable expansion of Japan’s merchandise trade deficit."

"While exports impressed, coming in at 6.9% on an annual basis, imports were far stronger than expected, with the annual growth rate at 6.2%, versus an expected rate of 2.7%. Seasonally adjusted, imports surged 5.0%, while exports jumped 3.1%. The import jump was driven in part by a 21% increase in LNG imports."

"In the Apr-Sep fiscal half-year, exports increased just 1.7% on an annual basis while imports increased 2.5%. While energy is an important driver of the worsening of Japan’s trade balance, the 6-month fiscal half-year data showed the benefit of energy price declines since June."

"Total energy imports in the Apr-Sep period accounted for 31.5% of total imports, which was down from 33.4% in the Jan-June period. The overall deficit also narrowed over these periods from JPY 7.6trn in the Jan-Jun period to JPY 5.4trn in the Apr-Sep period."

"While the energy price decline may help to stabilise the overall trade deficit it is clear that Japan has a very different external position now versus prior to the GFC when large current account surpluses were being recorded. Coupled with the actions of the BOJ, the yen’s safe-haven status is surely in doubt."

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