Why the yen has not strengthened despite a first-half current account surplus of more than ¥17 trillion, and the fact that yen purchases on a cash flow basis remain at around one-third of that amount. It also addresses the risk of yen depreciation in the second half indicated by the travel balance peaking out.
Despite securing a substantial first-half current account surplus of more than ¥17 trillion, the yen’s move toward appreciation remained limited. The article points out that yen purchases on a cash flow basis remain at around one-third of the total.
The travel balance peaking out is viewed as a factor determining the yen’s strength or weakness, in contrast to the size of the current account surplus. The expansion of the digital deficit and trends in foreign direct investment are also said to reflect the risk of yen depreciation in the second half.
This combination suggests that the risk of yen depreciation due to the US-Japan interest rate differential remains. It will be necessary to monitor the capital flows and changes in supply and demand behind the data.
Areas of focus going forward include trends in the travel balance, movements in foreign-currency assets, and the reality of foreign investment.