Japan’s Trade Surplus Soars 163.7% in April

Japan’s contentious trade surplus soared in April, the government said Monday, and though more increases are expected in the months ahead, the surplus should be kept in check by a stronger yen and a recovery in domestic demand.

Data released by the Ministry of Finance show Japan’s overall customs-cleared trade surplus grew 163.7% to $7.23 billion in April.

The sensitive surplus with the U.S., which has been grumbling about the growing trade imbalance between the two countries, soared 174.1% last month, to $4.1 billion from April 1996.

Economists attributed the jump mainly to car exports, which grew 32.1% in April from a year earlier, and slower growth in imports from sluggish domestic demand.

The relative weakness of the yen compared with a year ago also fueled a rise in exports, pushing Japan’s trade surplus higher after a long period of decline. A weaker yen makes Japanese exports more competitive on world markets.

Satoru Ogasawara, an economist at Deutsche Morgan Grenfell, said the rise in the trade surplus gave the Japanese government an incentive to keep the yen strong.

“Japan has been guiding the yen higher against the dollar to prove that it wasn’t seeking economic recovery by using its exports,” Ogasawara said.

“The United States may express concern over the rise in the surplus, but they won’t take it up as a real serious issue. Unless the U.S. economy deteriorates suddenly, it won’t become a big problem,” said Hisashi Yamada, an economist at Japan Research Institute Ltd.

Although the yen has strengthened to about 115 yen to the dollar compared with a 56-month high of 127.47 on May 1, Japanese exporters are still comfortable at this level, economists said.

The dollar traded as low as 114.85 yen in intraday dealings before rallying to settle in New York at 115.68 yen, up from 115.55 on Friday.