Japan records trade surplus as exports growth improves
Japan recorded a trade surplus of 57.3 billion yen ($507 million) in February, reversing the deficit in January.
Preliminary seasonally adjusted data released by the Ministry of Finance on Wednesday revealed that exports rose a better-than-expected 4.2 percent to 9.57 trillion yen in February.
Imports increased by 10.2 percent annually to 9.51 trillion yen, following a 2.5 percent contraction in January.
Japan had a trade deficit of 1.15 trillion that month.
Import costs are likely to increase as the de facto closure of the Strait of Hormuz due to the war against Iran increases oil and other energy prices.
Japan imports almost all of its oil, and Brent crude, the international standard, has risen to around US$100 ($A141) per barrel in recent weeks.
Geopolitical uncertainty, particularly the war in Iran, looms large for Japan’s export-led economy, but the weak yen is likely to work as a plus. The US dollar is trading around 159 yen, down from below 150 yen a year ago.
Shipments to China fell 10.9 percent compared to the same month last year, but demand is likely to be unusually weak as this year’s Lunar New Year holidays fall in February.
While automobile exports decreased, exports to the USA fell by 8 percent. President Donald Trump’s tariffs on Japanese cars, currently at 15 percent, continue to put pressure on Japanese automakers and auto supply manufacturers.
Exports to Europe continued to increase by 17 percent in February compared to the same month of the previous year. Exports to the rest of Asia also increased by 2.8 percent.
As the central bank’s policy board wraps up its two-day meeting on Thursday, investors are watching to see what the Bank of Japan might do on interest rates.
“Central banks are waiting to see whether these higher oil prices are a temporary dip or a continuing theme for 2026, in which case we could see more global currencies shifting from dovish to hawkish,” said Tim Waterer, chief market analyst at KCM Trade.
Investors are also closely watching what, if any, agreements could come from this week’s summit between Trump and Japan’s first female prime minister, Sanae Takaichi.
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