Japan's trade surplus swollen by firm yen

JAPAN'S politically embarrassing trade surplus rose to dollars 6.11bn in January, up 17 per cent on the same month a year earlier, marking a new flashpoint in the transpacific trade war. The surplus with the US alone grew by 7 per cent to dollars 3.13bn. But the increases were partly due to the rise in value of the yen against the dollar, writes Peter Torday.

For all of 1993 Japan had a bilateral surplus of dollars 59bn with the US. However, in yen terms the rise in the overall surplus in January was much more muted, increasing by 4.7 per cent to Y686bn. Although economists believe that the surplus is set to peak and even decline in yen terms as the strong yen chokes off export demand, Japanese officials concede that the dollar surplus with the US will remain high for the next few months.

In dollar terms overall exports rose by 7.5 per cent while imports gained by 4.8 per cent. In yen terms, however, exports shrank by 3.6 per cent while imports collapsed by 6 per cent due to Japan's deep recession.

Some of the increase in the January dollar surplus was due to surging exports to Asia. For instance, officials pointed out that exports of ships to Asian markets soared by 262.7 per cent from a year earlier. There was also a sharp rise in car exports to Europe because shipments held back in December to avoid breaking annual quota agreements with the EU were released in January.

After seasonal adjustment, the trade surplus narrowed in January to dollars 10.96bn from dollars 11.14bn in December.