Japan's May current account surplus hurt as yen rises

Japan’s May current account balance was hurt for the first time in nearly 2 years as a recent appreciation in the Japanese yen weighed on the country’s businesses, reducing profits in foreign investments, government data showed.

Japan's current account surplus, the broadest measure of Japan's trade with the rest of the world, contracted 2.4 percent on year to Y1.809 trillion, data released by the Ministry of Finance showed Friday. The contraction was wider than what the market had expected, of around Y1.75 trillion.

Among the key components in the current account, one of the widest gauges of a country's international trade, goods trade registered a surplus of Y39.9 billion, with exports sliding 11.9 percent from a year earlier and imports shrinking 13.4 percent.

The value of crude oil imports dropped 30.6 percent as average oil prices slid 31.6 percent to USD40.62 per barrel in the month. The value of liquefied natural gas imports plunged 41.9 percent. Moreover, the primary income surplus, which counts returns on Japanese investments abroad, narrowed 5.3 percent on year to Y1.898 trillion, as the yen strengthened. The trade balance swung to surplus on year.

Although the nation’s current account surplus was quite large, however, market participants said that a strong yen coupled with lower global energy prices brought down import prices, helping the nation's trade balance swing to the black.

Meanwhile, the travel surplus surged 20.2 percent to 125.4 billion yen, a record high for the month since comparable data became available in 1996 on the back of an increasing number of foreign tourists, suggesting that the effect of a series of earthquakes in southwestern Japan centering Kumamoto Prefecture in April was limited.