Japanese Yen struggles amid widening Trade Deficit, escalating import costs
USD/JPY appreciates after registering modest losses in the previous day, trading around 158.50 during the Asian hours on Thursday.
The Japanese Yen (JPY) faced challenges on Thursday as the trade deficit widened sharply, with the Merchandise Trade Balance Total increasing to JPY 634.5 billion in July, up from JPY 409.9 billion the previous month. This marked the third consecutive month of a deficit and the largest since January, driven by rising imports and slower export growth.
Both trade flows hit record highs in July, with exports growing 23.2% year-on-year to JPY 11,511.8 billion and imports surging 27.8% to JPY 12,146.3 billion. While strategists at Societe Generale remain cautiously optimistic about the Yen's medium-term prospects, the currency's future appears tied to official FX market actions or a decline in energy prices, which would help alleviate the pressure on Japan's economic outlook.
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