FOREX ALERTS >>
DailyFX Plus Login

fundamental alert

Article

Japanese Exports Sink to Record Low - Is Yen Intervention Next?
Thursday, 20 November 2008 02:48:32 GMT  |  Ilya Spivak, Currency Analyst
Delicious
Facebook

Japan’s Trade Balance fell back into deficit last month, showing a trade gap of -63.9 billion yen versus expectations of a 73.6 billion surplus. The dismal result came on the back of a staggering -7.7% drop in exports from a year earlier. Most tellingly, exports to China and the broader Asian region turned negative for the first time in 6 months as the spreading global slowdown punctures the last pockets of consumer demand around the world. Japan was confirmed to be in recession when growth fell for the second consecutive quarter in the three months through September.

From a policy perspective, Japanese leaders are short on available options: monetary policy has little scope with interest rates already at a meager 0.30% and fiscal stimulus could be hit-or-miss given the Japanese consumer’s infamous proclivity to favor saving over spending. External demand had propped up the economy in the past, but that is clearly not the case going forward. On balance, this likely means that murmurs about intervention in the currency market to suppress the Yen and boost exports are starting to make the rounds among officials.

More Articles

Feedback Form