Japan’s surplus warrants no yen intervention
2023-08-08
Summary:
Japan’s current account balance logged the fifth straight month of surplus in June as the trade balance swung to a surplus, government data showed on Tuesday.
Japan’s current account balance logged the fifth straight month of surplus in June as the trade balance swung to a surplus, government data showed on Tuesday.
That marked an expansion of about 1 trillion yen from the same month last year and compared with economists’ median forecast for a surplus of 1.4 trillion yen in a Reuters poll.
Japan’s balance of trade for June unexpectedly swung to its first surplus since July 2021, which should ease pressure on the economic recovery and on the BOJ to tighten further.
Japanese authorities are unlikely to intervene in foreign exchange markets to prop up the yen as the currency has already found some support and will head much higher as U.S. interest rates peak, former finance official Eisuke Sakakibara said.
The yen is poised to reach 130 against the dollar by the year end as the Fed ends its aggressive monetary tightening and as Japan's economic outlook brightens, he noted last week.
The yen has fallen 7.5% this year but steadied in the past week. It is trading around 143 and will likely remain range-bound before the U.S. CPI report.
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