Japan logs record $103 billion current account surplus in April-Sept.
Ideas:
Japan has always focused on its current account, while the US, for example, doesn't really say much about it, except when its political.
Japan has the highest debt to GDP ratio among advanced countries so its good that its current account has a surplus, which can reduce the debt.
As the Japanese yen is weak, most likely the Bank of Japan is not really concerned as overseas investments and the weak yen brings in more for Japan.
Of course the Bank of Japan is concerned but it has to balance out to positive with the negative, and at this time it says like there might be too many positives for a week yen and the Japanese economy.
With positives like primary income there might just be too many positives to keep the Japanese yen somewhat possible. And don't forget Japanese exporter gain from an weak yen along with foreign travelers to Japan.
As the Japanese economy has been somewhat stagnant for a long time, most likely the Japanese government and the Bank of Japan want to keep the Japanese yen weak but not too much, as it significantly affects the Japanese domestic economy and Japanese importers, with higher import prices.
At the present time, the only positives related to the Japanese economy, is exporters, overseas investments, and foreign tourists who spend a lot in Japan.
Despite the above listed positives there are still a lot of negatives such as imports were more than exports, and most likely, again, because of the weak Japanese yen which increased the value of imports, despite the weak Japanese yen increasing the export value too.
What Japan needs it some free trade agreements that can reduce the price of imports as Japan is a resource-poor country and they have to import much of what they need.
If Japan did have some free trade agreements, like with the US or even the EU, maybe import prices would not be so high despite the weak yen situation.
The interest rate variance or differential is because the Bank of Japan hasn't up until this year, increased it key rate, as it keeps saying the Japanese economy has been too weak and there are too many side affects, while the US Federal Reserve kept increasing the rate during the inflation period in the US, which caused the rate variance between the two countries.
The weak Japan yen is a boom for foreign tourists going to Japan as it gives them more purchasing power, so they are able to buy more things.
And of course it does help the domestic economy too, as foreign tourists spend a lot of money in hotels, restaurants, conveniences stores, tourist places and so on.
Because the Japanese yen is weak which makes it strong overseas for Japanese travelers, not that many Japanese are traveling overseas at this time.
Anything that reduces deficits in Japan is good for the Japanese economy as it might help to reduce the high GDP to debt ratio, which, again, it is the highest in the world among advanced economies.
The Japanese economy needs all the help it can get to the fact that the weak Japanese yen might be bringing in more foreign tourists is a good situation as again they spend a lot which helps the domestic economy, which was hit very hard by the pandemic.
Sometimes, in these articles, there seems to be data that contradicts other data, but that's OK. as data is good and needs to be seen, as data can give a more clearer picture of what is going on in Japan.
For example one sentence uses the phrase current account surplus, but the next sentence uses the phrase trade deficit.
Perhaps there needs a better explanation as at the beginning of the article it talks about a record surplus in the current account. So which is it exactly.
Have a nice day!
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