Japanese yen falls to four-year low

Stagflation fears abound as trade imbalance falls into deficit for second consecutive month

The Japanese yen fell to a four-year low against the dollar on Wednesday, as the nation’s trade balance fell into a deficit for the second consecutive month in September. 

Early on Wednesday the US dollar rose to ¥114.695 for the first time since 2017. 


Japan’s exports rose by 13.0% year-on-year, according to the Ministry of Finance. Although ahead of analyst forecasts, it nonetheless constituted the slowest expansion since February. 

Indeed, export growth stood far lower than the 26.2% increase enjoyed in August. Weakening auto exports proved to be a major factor, with car shipments plunging by 40.3%, the first fall since February also. 


Having risen by 44.7% year-on-year in the previous month, imports grew by 38.6% in September. The rising cost of medicines, oil and coal are thought to have played a significant role in the decline. 

With the yen-based cost of imports reaching their highest level in almost three years, Japan’s trade fell to a deficit of 622.8bn ($5.43bn).

Economic anxiety

In light of rising import costs, surging fuel prices and higher-than-anticipated inflation, anxiety has mounted that the world’s third-largest economy could be set to endure a period of stagflation. 

Japanese Prime Minister Fumio Kishida called an emergency meeting of cabinet members this week to discuss rising oil prices. 

Speaking to reporters afterwards the newly-appointed leader said he had urged officials to take action before the situation “went beyond their control”. 

In addition to working with the International Energy Association, Kishida’s government will also urge the Organisation of the Petroleum Exporting Countries and its allies to increase production.  

The yen’s fall to four-year low against the dollar can also be attributed to the recent rise in US Treasury yields as markets prepare for a likely tapering of the Federal Reserve’s substantial bond-purchasing programme. 

Japan’s Nikkei 225 Index closed Wednesday at 29,255.55, up 8.3% in the past two months.

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