Fall in Japanese exports boosts push for weaker yen

Japan's exports fell more than analysts forecast, and the annual trade deficit swelled to a record, bolstering the case for Prime Minister Shinzo Abe to weaken the yen even as trade tensions mount.

Shipments dropped 5.8 per cent last month from a year earlier, compared with a median estimate of 4.2 per cent in a survey of 23 economists. The annual deficit was 6.93 trillion yen (HK$608 billion), the finance ministry said yesterday.

Japan is mounting a defence of its currency policies before a Group of 20 meeting next month, as officials from Germany to South Korea express concern at efforts to weaken the yen.

In Tokyo on Wednesday, currency chief Takehiko Nakao said the Bank of Japan was not undertaking a "competitive" devaluation and that its aim was to end deflation.

"Foreign officials are becoming increasingly vocal over the possibility that Japan's policy actions have the potential to prompt a currency war," said Izumi Devalier, a Japan economist at HSBC. "I think the government will avoid taking the rhetoric too far."

A yen that has weakened about 7 per cent against the US dollar in the past two months makes products relatively cheap in export markets and boosts overseas income for Japanese companies such as Canon when repatriated. It also pushes up the cost of imports such as liquefied natural gas (LNG).