DUBAI: Japan’s finance ministry said on April 20 that its trade deficit narrowed to 754.5 billion yen ($5.6 billion) from 898.1 billion yen in February.
Economists forecast a deficit of 1.29 trillion yen.
Imports grew 7.3 percent from last year, the smallest gain in two years, as a stronger yen and lower prices for commodities including oil curbed import costs. Exports rose 4.3 percent from 2022, led by the automotive sector.
Japan’s deficit was less than the previous month but has been ongoing and is seen as affecting the country’s recovery prospects.
The Bank of Japan will hold a monetary policy meeting next week, the first under new Governor Kazuo Ueda, as questions and speculation mount about when to adjust the monetary policy.
Bank of Japan officials are concerned about changing or eliminating yield control incentives shortly after the offshore banking crisis, according to Asharq Business.
The latest data also comes amid concerns about a global economic slowdown. Global central banks have been raising interest rates to combat inflation, although their tightening cycles are waning.
March exports to the US rose 9.4 percent, the weakest level since October 2021, while the value of shipments to the EU grew by 5.1 percent, the lowest level since February 2021. Economists said Japanese exports could slow further in the coming months as borrowing costs rise.
The news came as it was revealed that foreigners were big buyers of Japanese shares in the week ended April 14, bolstered by dovish comments from the country’s new central bank governor and upbeat results of domestic retailers.
Global sentiment also remained positive and supported risk appetite as a cooler-than-expected US inflation reading reinforced expectations that the US Federal Reserve may soon pause raising interest rates.
Foreign investors purchased a net 1.59 trillion yen of Japanese equities last week, their biggest weekly net purchases since at least January 2018, data from Japanese exchanges showed.
Foreigners bought 1.05 trillion yen of cash equities and 540.77 billion yen of derivatives.
Retailers Aeon Co. Ltd. and Uniqlo-owner Fast Retailing, both reported strong earnings last week, signalling a recovery in the retail sector.
The Nikkei share average jumped 3.5 percent last week, its biggest weekly gain since November 2022, while the broader Topix index added 2.7 percent.
“Japan has been one of our favorite markets,“said Fabiana Fedeli, chief investment officer, Equities at M&G Investments.
“We have found a number of companies that are improving operational leverage with a positive impact on earnings growth, alongside increasing shareholder returns via raising dividends and share buybacks, even without the support of the macroeconomic backdrop.”
Meanwhile, foreigners purchased 9.1 billion yen of long-term Japanese bonds in a third-straight week of net buying but sold 350.2 billion yen of short-term bonds.
Japanese investors were net buyers of 500.2 billion yen of long-term and 18.5 billion yen of short-term overseas bonds. They, however, sold 65.3 billion yen of foreign equities after two weeks of net buying in a row.
- with input from Reuters
