Japan’s trade deficit halved in 2023
Japan exports rose to record high in December, as shipments to the U.S. surged to their strongest-ever level and exports to China were boosted by shipments of semiconductor manufacturing equipment and cars.
For the whole of 2023, Japan recorded a trade deficit of ¥9.29Tln, a third consecutive year of deficit. IG Angela Barnes has more
(AI Video Summary)
Japan's exports
Japan's exports reached an all-time high in December, resulting in a surprising trade surplus of 62.1 billion yen. Experts had expected a deficit of 122.1 billion yen, but the growth in exports exceeded expectations, rising by 9.8% compared to the previous year. Shipments to the United States saw a big jump, reaching their highest level ever and increasing by 20.4%. This growth was largely driven by the export of cars and imported parts, which has been expanding for the past 27 months. Japan also saw a 9.6% increase in exports to China, their largest trading partner, due to the increased shipment of semiconductor manufacturing equipment and cards.
Japanese imports
On the other hand, Japan's imports fell by 6.8%, which was worse than the projected 5.3% decrease. Throughout 2023, Japan had a total trade deficit of 9.29 trillion yen, marking the third consecutive year of deficit. Turning our attention to the performance of Japan's Nikkei 225 index, it is currently up by a slight 0.3%. Since October of last year, the index has been steadily increasing and reached a new record in nearly 34 years by the beginning of January.
The Bank of Japan
Although the index experienced a decline earlier in the day, it later recovered as traders considered the latest communication from Japan's central bank, which decided to keep its monetary policy unchanged. Now, looking at the U.S. dollar to Japanese yen price chart, the currency pair has seen a 0.26% decrease, staying within the familiar range of 1.47 to 1.48. Market participants have been favoring the U.S. dollar, leading to its strengthening against the JPY.
Purchasing Managers' Index
Traders will now analyze the latest PMI (Purchasing Managers' Index) data before the U.S. trading session begins. In summary, Japan's exports exceeded expectations, resulting in a trade surplus, while their imports fell. The stock market has been performing well, reaching new record levels, and the U.S. dollar is strengthening against the Japanese yen. Traders will now be looking at the PMI data to determine how the market might move during the U.S. session.
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