Japan logs current account surplus for eighth straight month
Business
Central bank chief says they expect trend inflation to gradually approach 2pc
TOKYO (Reuters) – Japan logged in September its largest current account surplus in 18 months as the trade balance swung into the black, the Ministry of Finance (MOF) said on Thursday, with hefty gains from overseas investments boosting the balance of payments.
Japan's current account surplus stood at 2.72 trillion yen ($18.03 billion) in September, the MOF data showed, a little shy of economists' median forecast for a surplus of 3.0 trillion yen in a Reuters poll.
It was the eighth straight month of surplus, the MOF data showed.
A breakdown of the current account data showed the primary income surplus from Japan's direct investment and portfolio investment came to roughly 3 trillion yen in September, overwhelming a trade surplus of 341 billion yen.
For the first half of this fiscal year, Japan logged a record current account surplus of 12.7 trillion yen, with primary income gains at around 18.4 trillion yen, also a record and more than offsetting a trade deficit of 1.4 trillion yen.
PRICES AND WAGES
Bank of Japan Governor Kazuo Ueda said on Thursday companies were becoming more active than before in raising prices and wages, signalling his conviction the country was making progress towards sustainably hitting the bank's 2 per cent inflation target.
Whether wage hikes will broaden and firms begin to lift prices will be key to judging whether the BOJ's inflation target can be met in a sustainable fashion, Ueda told parliament.
"We expect trend inflation to gradually approach 2pc. But we'd like to wait until we have more conviction that sustained achievement of our price target comes into sight," Ueda said on the timing of an exit from ultra-loose monetary policy.
"Until then, we will maintain negative interest rates and the yield curve control framework," he added.
Ueda said it was hard to say now in what order the BOJ could end negative rates and yield curve control, as that would depend on economic and financial conditions at the time.
CHIP SECTOR
Japan's efforts to regain its position as a leading manufacturer of chips are "impressive", the head of a leading chip research organisation said on Thursday.
"Japan this time has taken a bold approach and has implemented very quick decision making," Luc Van den hove, CEO of Belgium-based Imec told reporters in Tokyo.
Japan, a leading provider of chipmaking tools and materials that lost its edge in manufacturing in recent decades, is providing large subsidies to domestic and foreign chipmakers to build capacity.
One key initiative is chip foundry venture Rapidus, which is led by veteran chip executives and hopes to manufacture cutting-edge chips by partnering with IBM and Imec.
The company is targeting territory dominated by big players including Taiwan's TSMC and South Korea's Samsung Electronics, which have spent years building up their chipmaking operations.
"What Rapidus is trying to do is extremely difficult," said Van den hove, adding that "the Japanese team and government are very motivated to make it a success, so I'm positive."
Imec, an important part of chipmaking research efforts funded by industry and governments, is considering opening offices in Hokkaido, where Rapidus production will be located, and in Tokyo, Van den hove said.
Countries around the world are looking to strengthen their control over chip supply chains after global shocks including the pandemic and trade tensions between the US and China.
"If everybody is going to try to do everything on their own and decouple the world then it will result actually in a lot of duplication, in a lot of additional cost and in actually a slowdown in innovation," Van den hove said.
