Japanese Exports Exceed Estimates as Yen’s Slide Aids Sales

Japan’s exports exceeded estimates in March and the trade deficit narrowed from the previous month after declines in the yen made the nation’s products more competitive in overseas markets.

Overseas shipments rose 1.1 percent from a year earlier, the Finance Ministry said in Tokyo today. The median estimate of 22 economists surveyed by Bloomberg News was for a 0.2 percent increase. The trade shortfall was 362.4 billion yen ($3.7 billion) from 777.5 billion yen in February.

Better-than-forecast trade numbers add to positive signs for Japan’s economy as central bank Governor Haruhiko Kuroda rolls out unprecedented monetary stimulus to trigger a growth rebound. At the same time, declines in shipments to China and the European Union highlighted limits on the likely scale of export gains this year. The U.S. displaced China as Japan’s biggest export market for the year through March.

“The yen’s weakness has been supporting Japan’s exports,” said Long Hanhua Wang, an economist at Royal Bank of Scotland Group Plc in Tokyo. “We are yet to see any signs that Japan’s exports are set for a full-fledged rebound.”

The yen fell about 19 percent against the dollar in the past six months, trading at 97.91 as of 2:42 p.m. in Tokyo today. Imports rose a less-than-forecast 5.5 percent, today’s report showed.

Import Costs

While the trade deficit narrowed from the previous month, it was four times bigger than a year earlier. The trade shortfall for the year through March was a record. The yen’s decline is swelling Japan’s import bill as nuclear-plant shutdowns force increased inbound shipments of fossil fuels.

Japanese exports to China fell 2.5 percent from a year earlier, while those to the European Union slid 4.7 percent. Shipments to the U.S. rose 7 percent.

The Group of 20 economies will affirm a commitment to avoid weakening their currencies to gain an advantage for their exports, according to a draft statement prepared for a meeting this week in Washington, Bloomberg BNA reported.

The draft statement, seen by a Bloomberg BNA reporter, maintains a pledge made in February in Moscow to “move more rapidly toward more market-determined exchange rate systems and exchange-rate flexibility” and to refrain from competitive devaluations.

G-20 Communique

A first draft communique, prepared for meetings of finance ministers and central bankers starting today, describes the global outlook as “generally somewhat weaker and uneven” with “unbalanced” recoveries between advanced economies and emerging markets.

The maintaining of the language on currencies suggests the G-20 members will withhold direct criticism of Japan’s efforts to rally its economy from 15 years of deflation so long as it doesn’t seek to do so at their expense by driving the yen down. U.S. Treasury Secretary Jacob J. Lew and Bank of Canada Governor Mark Carney both signaled support for Japan’s stimulus push this week.

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