"It's hard to anticipate when Japan can emerge from trade deficits at this point. If a trade deficit as a result of high energy import costs makes Japan look like a high-cost country, it may discourage moves by companies to have production centers in Japan and undermine Abenomics."
- Takeshi Minami, chief economist at Norinchukin Research Institute
Amid debates the BoJ will not announce fresh stimulus any time soon the Yen managed to appreciate against the U.S. Dollar and push the pair down to 101.76. This week, however, the pair jumped once again following a report from Japanese Ministry of Finance that said the world's third largest economy posted a record annual trade deficit, as Yen's depreciation pushed the cost of energy imports significantly higher.
According to official data, the gap soared to 11.5 trillion yen last year, posting a 65% jump from a year earlier. The deficit reached 1.3 trillion in December, from 1.29 a month earlier, adding to Japan's 17-long string of monthly deficits. In addition to that, exports advanced just 15.3% last month, slowing from a 18.4% gain a month ago, and falling short of analysts predictions of the 18% climb. On the contrary, imports rocketed 24.7% year-on-year, accelerating from the 21.1% growth seen in November. After a decision to shut down all of Japan's nuclear reactors, the country has seen its energy imports rocketing, and amid weaker Yen the government should pay more for those imports. The Yen fell more than 20% against the greenback between January and December last year. A sluggish growth in exports, and constantly rising trade deficit are adding more pressure on Shinzo Abe, who seeks for a weaker domestic currency to boost growth in export-oriented economy.
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