"The trade deficit means the yen can't just keep weakening"
- Takeshi Minami, chief economist at Norinchukin Research Institute Co.
The deficit in Japan's trade balance widened to a record high on energy imports and a weaker Yen, reflecting consequences of Prime Minister Shinzo Abe's policies that are pushing the currency lower. According to the Ministry of Finance, nation's trade gap swelled to a record 1.63 trillion yen ($17.4 billion), following 643 billion yen in the previous month. One of the reasons was a big increase in imports, which surged 7.3% in January, outpacing 6.4% gain in exports. At the same time, exports to China, the major destination for Japanese shipments, added 3% from a year earlier, posting the first increase since May, while shipments to the U.S. gained 10.9% and exports to the European Union dropped 4.5% in January.
"The trade deficit means the yen can't just keep weakening," said Takeshi Minami, chief economist at Norinchukin Research Institute Co. in Tokyo. "Abe will probably restart some nuclear plants after the upper house elections in July as, without them; the costs to the economy are too great."
"We reiterate that excess volatility of financial flows and disorderly movements in exchange rates have adverse implications for economic and financial stability," the G20 statement said adopting a G7 wording.
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