Japan’s widening trade deficit and surging imports drive yen weakness against major currencies in early European trading.
The Japanese yen fell 0.22% against the US dollar to 158.50 in European trading, pressured by a larger-than-expected trade deficit. Japan’s trade gap widened to JPY 634.5 billion in the latest report, up from JPY 409.9 billion, as elevated energy prices boosted imports.
Imports surged 27.8% year-over-year to JPY 12.15 trillion, outpacing exports, which grew 23.2%—above the 19.9% estimate. Analysts now expect the deficit to expand further to JPY 680 billion.
Markets remain focused on the Bank of Japan, with expectations for a 25bps rate hike in September gaining traction after Standard Chartered revised its forecast to include an additional hike in 2027.