Japan Mar chemical exports rise 3.9% as yen continues to weaken

SINGAPORE (ICIS)–Japan’s chemical exports rose by 3.9% year on year to yen (Y) 1.03 trillion in March, supported by higher plastic materials shipments abroad, amid the continued weakness of the yen, official data showed on Wednesday.

The country’s exports of plastic materials rose by 19.3% year on year to Y297 billion in March, Ministry of Finance (MOF) data showed.

By volume, exports of plastic materials rose by 7.6% year on year to 513,959 tonnes.

Shipments of organic chemicals, meanwhile, slipped by 2.2% year on year to Y199.4 billion in March.

Exports of motor vehicles rose by 15.8% year on year to Y1.5 trillion in March, while shipments of motor vehicle parts were up by 3.7% at Y349 billion.

Japan’s overall exports rose by 7.3% year on year to Y9.47 trillion in March, up for the fourth straight month, while imports were down by 4.9% at Y9.1 trillion.

This resulted in a trade surplus of around Y366 billion, the first in three months and reversing the around Y378 billion deficit recorded in February this year.

By destination, Japan’s overall exports to the US rose by 8.5% year on year while those to China were up by 12.6%.

WEAK YEN PROVIDES TAILWIND FOR EXPORTS
The March trade data follows the yen sinking hit 34-year lows to the dollar beyond 154 yen this week as hopes of quick US interest rates receded amid persistent inflation.

US Federal Reserve Chair Jerome Powell, speaking at the Washington Forum on the Canadian Economy on 16 April, said the US economy has not seen inflation come back to the central bank’s goal, pointing to the further unlikelihood that interest rate cuts are in the offing anytime soon.

At 01:33 GMT, the yen was trading at 154.62 to the dollar. The US dollar extended gains on 16 April, with the US Dollar Index (DXY) rising to highs of 106.51 before closing around 106.06.

Higher interest rates in the US make dollar-denominated assets more attractive due to higher yields compared to Japanese assets.

Japan’s finance minister Shunichi Suzuki on 16 April said that he is closely monitoring the yen’s depreciation and are ready to implement all necessary measures to address the situation if needed.

Japanese authorities intervened in the currency market in 2022 to purchase the yen on three occasions.

“Jawboning from officials appeared to be an everyday affair with markets largely ignoring them for now as the move higher appears to be in line with recent market developments – higher US treasury yields while the Bank of Japan is still perceived to normalise slowly,” Singapore-based OCBC Global Markets Research said in a note.

The Bank of Japan on 19 March ended eight years of negative rates, ending the country’s historic era of negative interest rates, but this has failed to stop the slide in the yen.

In a statement announcing the policy change, the central bank said that the economy has “recovered moderately” and that it is “highly likely that wages will continue to increase steadily.”

Focus article by Nurluqman Suratman