"The current account surplus will likely expand gradually as the trade deficit could shrink on the back of a recovery in exports while the income account surplus should grow thanks to a weak yen and Japanese firms' interest in investing overseas"
- Takuya Hoshino, an economist at Dai-Ichi Research Institute
The Japanese Yen tumbled 0.35% against the greenback, bouncing from the two-month high, after disappointing data, underscoring drags on the world's third largest economy as Shinzo Abe tries to revive economic growth. A report from the Ministry of Finance showed Japanese current-account surplus plunged 64% from a year earlier, hitting a record low of 161.5 billion yen, as overseas income fell for the first time in nine months, while imports exceeded exports. The major downside pressure came from surplus in income balance, which plunged 10% on an annual basis to 1.25 trillion yen, from 1.79 a month earlier, due to decline in profits from direct investment. Official data also showed that even though investment income on country's residents' overseas investments advanced, foreign companies in Japan sent most of their profits back home, pulling the overall balance lower.
Japanese exporters are benefitting from Abenomics, as exports climbed 17.2% over corresponding period. On the other hand, this figure was outweighed by a 27.1% jump in imports. Higher import costs are one of the side-effects of Shinzo Abe's policy, a set of measures designed to weaken the Japanese Yen. Trade figures are considered as highly volatile, though they are representing the total value of goods that pass through the nation's customs and are not seasonally adjusted.
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