Japan annual trade deficit jumps, on rising energy costs

Amidst rising cost of energy Japan has reported an annual trade deficit at ¥11.5 trillion ($108 billion) in 2013 - a 65 per cent jump from a year ago.

The weak yen added to Japan's energy woes pushing up the cost of energy imports which have been rising following the shutdown of its nuclear reactors in the aftermath of the tsunami and earthquake in 2011.

A series of aggressive policy moves have weakened the yen, adding to the costs of those imports.

Meanwhile, the Japanese currency retreated over 20 per cent against the US dollar between January and December last year.

According to the latest trade data, while Japan's imports of Liquefied Natural Gas (LNG) were up by 0.2 per cent by volume in 2013 as against the previous year - the value of those imports shot nearly 18 per cent.

This comes as the third year in a row that Japan - traditionally known for its strong exports sector - has reported an annual trade deficit.

The past two decades have seen, a growth stagnation in the world's third-largest economy.

In a bid to address the issue, policymakers have introduced a slew of aggressive moves in the past few months including doubling the country's money supply.

Meanwhile, the dollar slid to a seven-week low against the yen today, as investors sought to sell  emerging market currencies late last week, and seek shelter in the safe-haven Japanese currency.

The dollar was down to as low as ¥101.77, its lowest level since early December, and was last at ¥102.36 . The past three sessions have seen the US currency down around 2.1 per cent.

Reuters quoted Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore as saying, it was all driven by stop-loss selling in thin, pre-Tokyo markets, referring to the dollar's earlier drop to a seven-week low against the yen.

He added, the market was definitely focused on emerging markets, particularly the weak countries.

Emerging market currencies from Turkey to Argentina were dumped last week, on fears among investors of a shakeout in markets possibly leading  to a full-blown financial crisis.