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(Bloomberg) — Japan’s exports rose for a third month in December on the back of a weaker yen, as businesses waited for further clarity on likely US trade policy in President Donald Trump’s second term.
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Exports measured in value gained 2.8% from a year ago led by chip-making machinery and semiconductor parts, the Ministry of Finance reported Thursday. That beat the consensus estimate of a 2.4% increase, although shipments fell in terms of volume. Imports increased 1.8%, led by calculation machinery and related goods, but was weaker than expectations of a 3.2% increase.
The yen averaged 152.48 per dollar in December, 3.8% weaker than a year earlier, the report said. A weaker yen tends to help exporters’ profits while it makes imports of energy and food more expensive.
“Exports have been lacking strength. The weaker yen is pushing up the value of exports, but the volume is falling,” said Yuichi Kodama, economist at Meiji Yasuda Research Institute. “Companies are waiting to see what the Trump administration’s tariff policy will be. There is of course a risk that exports will decline if tariffs are actually imposed.”
By region, shipments to the US fell 2.1%, while those to China declined 3%. Exports to Europe rose 0.5%, and increased by 5.8% to Asia.
The data come a day before the Bank of Japan’s latest policy decision, where the central bank is expected to raise rates to 0.5%. The weakening of the yen and increased imports volume both suggest that inflationary pressures will remain, helping back the BOJ’s case to hike.
Before Thursday’s report was released, analysts at SMBC Nikko Securities Inc. wrote in a note that exports probably got a lift from last-minute demand anticipating fresh tariffs under Trump.
Following his inauguration this week, Trump said he’s considering enacting levies of as much 25% on goods from Mexico and Canada by Feb. 1. He could also hit China with 10% tariffs on the same day.
Amid a flurry of announcements from Trump, Japanese officials said they were trying to analyze his trade policies and their impact on Japanese companies. Chief currency official Atsushi Mimura said Tuesday that Japan’s response to any US tariffs will depend on what the measures target, when they come into effect and other details.
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