Yen slips after record deficit
BUSINESS / 24 Jan '13, 1:33pmBy: SAPA
Tokyo - The yen slipped Thursday after Japan announced a record trade deficit for 2012, ending a rally fuelled by disappointment over the Bank of Japan's recent monetary policy announcement.
The dollar bought 88.84 yen in Tokyo trade, from 88.56 yen in New York late Wednesday, while the euro was at 118.36 yen, from 118.00 yen.
Graphic: renjith krishnan
The euro was up to $1.3320 from $1.3315 ahead of the release of eurozone economic data later in the day.
Japan said it logged a record 6.92 trillion yen ($78 billion) deficit in 2012, as exports to China and the European Union tumbled, but the gloomy data fell within economists' expectations.
“Although trade deficits have been one of the factors pushing the yen down, most of them had been priced in by the market,” said Minori Uchida, chief forex analyst at the Bank of Tokyo-Mitsubishi UFJ.
Japan's trade deficit was unlikely to keep widening in 2013 as exports to China should pick up, with a spike in energy imports abating, Uchida said.
Japan's power bills have soared as it turned to pricey fossil-fuel alternatives after switching off its nuclear reactors following the crisis at Fukushima in 2011.
“We see 2012 as the worst and the trade account could improve slightly in 2013, although there is a long way to go before we have a trade surplus,” Uchida told Dow Jones Newswires.
On Tuesday, the Bank of Japan said it would carry out monetary easing on an open-ended basis and adopted a two-percent inflation target following pressure from the government.
The unlimited asset-purchase scheme - similar to the US Federal Reserve's quantitative easing - is to start next year.
However, dealers, who had been selling the yen in recent weeks on expectations of such a move, were disappointed the BoJ did not unveil any more detail or further measures.
Eyes were also on the eurozone for fresh economic data, with the euro given support by a positive German investor sentiment survey earlier this week.
Weighing on the currency, the International Monetary Fund cut its global growth forecasts slightly Wednesday and predicted that the eurozone, mired in a public debt crisis, would spend a second year in recession in 2013. - Sapa-AFP