Japan's trade balance suggests an extraordinary depreciation of the yen
The rise in crude oil prices has massively increased Japan's import value, and the trade balance is deteriorating rapidly.
Naturally, the demand for dollars in actual use has increased, and this point puts pressure on a stronger dollar.
The exchange rate and the trade balance are
Trade balance improvement (increased dollar selling) ⇒ yen appreciation (harmful to exports, favorable to imports) ⇒ trade balance deterioration (increased dollar buying demand) ⇒ yen depreciation (favorable to exports, unfavorable to imports) ⇒ trade balance improvement ⇒ …
pattern repeated.
If you look at this on a graph,
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