Japan’s August trade deficit on a customs basis widened to -¥1,105.60 billion. This could weigh on the yen and affect corporate earnings through higher import costs.
Japan’s August trade deficit on a customs basis widened to -¥1,105.60 billion, according to the announcement. A widening trade deficit has also been viewed as a factor affecting movements in the yen.
A deterioration in the trade balance is likely to cap yen gains from a supply-demand perspective and, through higher import costs, tends to create varying effects on corporate earnings, according to commentary.
It has been pointed out that industries with significant cost exposure, such as energy, materials and transportation, are more likely to undergo reassessment when movements in foreign exchange rates and resource prices coincide.