The Japanese Yen (JPY) was little changed against the majority of its most traded peers mid-week due to signs that the Japanese economy is showing signs of recovery. Bank of Japan (BoJ) Governor Haruhiko Kuroda said that the national economy was gradually emerging from recession, but did acknowledge that the introduction of 2014’s sales tax inflicted a bigger blow on growth than had initially been expected.
‘It’s true the effect of last April’s sales tax hike was bigger than expected, but economic growth is turning positive and the pressure on prices will disappear from April. The economy is sustaining positive momentum spurred on by the central bank’s massive stimulus programme launched in 2013,’ said Kuroda.
Japan emerged from the recession triggered by the sales tax earlier in the year and received more positive news as data released on Wednesday showed that Japan’s services sector sentiment improved for a fifth consecutive month in April.
A report released by the Ministry of Finance showed that Japan’s current-account surplus widened to its biggest level since 2008 in March as increased demand from overseas importers and an improved trade balance supported. The nation’s trade balance surplus now stands at 2.8 trillion Yen, a figure that was better than the 2.1 trillion Yen forecast by economists.
Cheaper energy imports helped boost the surplus. Japan relies heavily on imported oil and gas and so the decline in oil prices over the past few months has been a big boost to the nation’s imports. An increase in tourists visiting Japan also aided the nation’s income.
Another sign that the Japanese economy is improving was a report released by Nissan. The car manufacturer expects profits to rise by 6% this year as the company benefits from the weakened Japanese Yen and increased demand from the US. The company’s net income is expected to increase by 485 billion Yen in the 12 months ending March 2016, a solid improvement on the previous year’s income of 457.6 billion.
The Yen could experience movement later in the session if the latest data releases out of the US disappoint. Against the Euro, the Japanese Yen softened following the release of mixed GDP data out of the Eurozone. French GDP smashed forecasts but German GDP disappointed. Inflation data out of the currency bloc’s largest economy showed improvement however and was enough to push the single currency higher against several major peers.
The US Dollar to Japanese Yen (USD/JPY) exchange rate is presently trending in the region of 119.7900.