Helped by weak yen, Japan remains top creditor nation with record net external assets

By Tetsushi Kajimoto

TOKYO (Reuters) -Japan’s internet exterior belongings hit a report 411 trillion yen ($3.24 trillion) in 2021, to retain its place as the highest creditor for 31 years in a row, the Ministry of Finance (MOF) mentioned on Friday.

A weak yen – it misplaced about 11% towards the greenback final 12 months – boosted the worth of overseas belongings held by the Japanese authorities, companies and people.

And that forex issue, along with an increase in direct funding abroad, helped Japan put up a report 5.6 billion yen annual improve within the worth of internet exterior belongings.

“The weak yen and the positive aspects within the U.S. inventory market helped internet exterior belongings pile up,” mentioned Daisaku Ueno, chief FX strategist at Mitsubishi UFJ Morgan Stanley Securities, including that the information held no implications for near-term forex strikes.

The information may ease some issues concerning the forex’s latest sharp drop to two-decade lows past 131 yen to the greenback, which has raised worries about Japan’s buying energy.

Japan’s internet exterior belongings had been 1.3 instances than these held by Germany, the world’s No.2 creditor, adopted by Hong Kong and China, as of end-2021.

Gross exterior belongings stood at 1,249.9 trillion yen and exterior debt got here to 838.7 trillion yen, bringing Japan’s internet exterior belongings to 411.2 trillion yen.

Separate information confirmed Japan’s present account surplus at 15.5 trillion yen in 2021, down 1.2% from a 12 months earlier, with major earnings positive aspects price 20.5 trillion yen including to a commerce surplus of 1.7 trillion yen.

The information underscored the view that Japan’s hefty earnings positive aspects from its abroad funding greater than offsets a weak commerce steadiness, serving to hold the yen’s standing as a safe-haven forex, for now.

“Within the medium to future, nonetheless, the yen will not be perceived as a safe-haven forex given Japan’s commerce deficit and its shrinking inhabitants,” Ueno mentioned.

($1 = 126.8400 yen)

(Reporting by Tetsushi KajimotoEditing by Shri Navaratnam & Simon Cameron-Moore)