The Japanese Yen struggled as a wider trade deficit and record import bill highlighted the economic cost of expensive energy and a weak currency.
The Japanese Yen edged lower on Thursday as investors assessed another sizeable Japanese trade deficit and the growing cost of energy imports.
The US Dollar to Japanese Yen (USD/JPY) exchange rate traded around 158.41, up 0.09% on the day, although the pair remained 0.65% lower over five sessions.
Japan’s exports rose 23.2% from a year earlier in July, but imports increased an even stronger 27.8%, leaving a trade deficit of ¥634.5 billion.
Imports reached a record ¥12.15 trillion as the Strait of Hormuz disruption pushed up the cost of energy purchases.
Weak Yen Adds to Import Pressure
The figures underline the policy challenge facing Tokyo.
A weak currency helps exporters, but it also magnifies the domestic cost of imported oil, food and other essential goods at a time when geopolitical risks remain elevated.
Former top Japanese currency diplomat Mitsuhiro Furusawa has warned that yen weakness is damaging the economy by raising import costs and argued that intervention alone cannot deliver a durable solution.
ING strategists Chris Turner and Francesco Pesole also see monetary policy as central to the outlook, saying: “Faster BoJ tightening would help,” although a softer Federal Reserve stance is also needed to remove upward pressure from USD/JPY.
The near-term range remains difficult.
The Yen has recovered from levels above 163 reached in July, but repeated failures to hold USD/JPY below 158 show that yield differentials and import pressures continue to work against a sustained Japanese currency recovery.
Our currency coverage draws on live market data, official economic releases and published bank research.
