Arab Today, arab today importers pay price for japan\s lower yen
Last Updated : GMT 02:18:28
Arab Today, arab today
Arab Today, arab today

Importers pay price for Japan\'s lower yen

Arab Today, arab today

Arab Today, arab today Importers pay price for Japan\'s lower yen

Tokyo - AFP

Japan's trade deficit quadrupled in March, figures showed Thursday, as the weakening yen made fuel imports much more costly, even as it helped the country's once-squeezed exporters. The value of goods that came into the country was 362.4 billion yen ($3.7 billion) higher than that of exports in the month, four times the gap from the same period a year earlier. Compared with March 2012, the yen was worth around 16 percent less in March this year, vastly boosting the cost of the dollar-priced fossil fuels that Japan has to import. Exports rose 1.1 percent to 6.27 trillion yen, helped by a big bump in US-bound shipments, which soared 7.0 percent. But overall imports climbed 5.5 percent to 6.63 trillion yen with purchases of crude oil up 7.0 percent and liquefied natural gas up 8.8 percent. "It was inevitable that the trade balance would end up with a deficit because of the impact of currency rates," said Masahiko Hashimoto, economist at Daiwa Institute of Research. The yen's average rate was 94.08 to the dollar in March against 81.04 in March 2012. It has weakened further since then, and stood around the 98 level on Thursday. "The lower yen has helped ramp up exports in value but their volume has yet to show a strong recovery. There is a time lag until we see a real improvement," Hashimoto said. "Energy imports stay high and the yen was weakening against this background, resulting in trade deficits. We are now seeing the negative side although the overall impact will be positive (longer-term)," he said. Japan is heavily dependent on burning fossil fuels to generate electricity. Most nuclear reactors remain off-line as the nation battles safety fears in the aftermath of the huge 2011 earthquake and tsunami that sparked a disaster at the Fukushima nuclear facility. A trade ministry panel estimates the stalled reactors, coupled with the weak yen will make nine Japanese power companies pay 3.8 trillion yen ($38 billion) more in fuel costs in the current fiscal year from April, against pre-disaster fiscal 2010. Even compared with fiscal 2012, the 2013 burden will be up by 700 billion yen, it said. The depreciating yen is set to increase the cost of a wide range of goods, ranging from foodstuffs to jewellery. As he took office in December, Prime Minister Shinzo Abe vowed to get the country out of 15 years of deflation. He pushed for active government spending and demanded aggressive monetary easing by the Bank of Japan, sending the yen tumbling against major other currencies and boosting stock prices to multi-year highs. While being lauded for reversing investor sentiment, Abe is now faced with criticism that households will feel only the downside of the lower yen. He argued Thursday that consumers should start feeling the effects of his economic policies through income hikes after the summer. "I've asked business leaders to return favourable corporate earnings to their workers," Abe told a morning talk show on private Nippon Television. Economists say the trade balance will likely remain in the red in coming months but that the broader current account, which includes returns on overseas investments, will rebound to a steady surplus. -- Dow Jones Newswires contributed this article --

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