Strong yen, U.S. buyers boost Japan's surplus

August 13, 1994|By Bloomberg Business News

TOKYO -- Japan's politically sensitive trade surplus rose 4 percent in July compared with July 1993, pushed up by the yen's strength during the month and robust exports of automobiles, engines and semiconductors to the United States.

The merchandise trade balance, a measure of the flow of goods in and out of the country, came to a surplus of $12.30 billion in July, the fifth-highest ever, the ministry said.

Economists said the continued growth of the surplus will keep pressure on the yen's value. Japanese exporters converting overseas earnings into yen keeps demand for yen high.

As long as Japanese exports keep selling well and foreign access to Japanese markets is limited, the yen will remain strong, economists say.

Japan's surplus with the U.S. surged 20 percent, to $5.627 billion, the ministry said, the second-highest ever. Exports to the United States rose 14.3 percent, while imports from the United States increased 8.6 percent.

Overall for Japan, both exports and imports were strong in July. Exports rose 6.9 percent, while imports rose 8.5 percent.

Although more and more imports are flowing into Japan, the rise in the surplus casts a shadow over strained U.S.-Japan trade relations.

The United States is pressuring Japan to assure greater access to its markets to foreign firms. Japan faces possible sanctions if it doesn't reach an agreement with the U.S. by Sept. 30 on three priority sectors: auto and auto parts, insurance and government procurement of telecommunications and medical equipment.

The rise of the surplus in July appears to puncture the prevailing opinion among economists that Japan's trade surplus would start to decline consistently this summer. In May, the surplus fell 15.7 percent, but it rose 14.1 percent in June. Many economists had expected the surplus to fall again in July.

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