Japanese Exports Increase, Trade Balance Deficit Swells
Japan's exports increased rapidly due to a surge in shipments of semiconductor products to China and the US. However, imports that were still high increased the trade balance deficit.
On Wednesday (16/March), Japan's Cabinet Office released data on exports increasing by 19.1 percent year-over-year (Year-over-Year) in February. This figure was slightly below economists' expectations for a 21 percent increase, but much higher than the previous month's growth of only 9.6 percent.
The increase in exports was inseparable from the increase in shipments of goods to China by 25.8 percent, most of which consisted of semi-conductor products. Meanwhile, Japan's shipments of goods to other major trading partners such as the United States rose 16.0 percent due to shipments of cars and automotive products.
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On the other hand, Japanese imports increased by 34 percent on an annual basis. Although still lower than January's growth at 38.7 percent, the import figure this time exceeded economists' forecasts for a 28.0 percent increase.
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The sharp rise in Japanese imports was caused by a surge in energy commodity prices on international markets. Japan has so far been known as an oil importing country whose economy is heavily dependent on world raw material prices.
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Surging Japanese exports followed by a sharp increase in imports made the trade balance deficit in February swell by 668.3 billion Yen, far exceeding economists' expectations for a deficit of 112.6 billion Yen. The deficit this time is quite worrying, considering that the deficit in January was only 2.19 trillion Yen.
USD/JPY Steady Ahead of The Fed Announcement
The release of Japan's export-import data this morning did not have a high impact on the movement of the Yen against the US Dollar. The yen is currently near a 5-year record low against the US Dollar. Compared to Japanese economic data, markets are paying more attention to interest rate and economic policy announcements early tomorrow. Investors tend to sell Yen and switch to the Greenback because it offers a more attractive interest rate. When this news was released, the USD/JPY pair was trading around 118,297, not far from the daily open price at 118,292.
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