Yen Weakens; Current Account Surplus Drops 16%

Chandrasekhar Atreya
12 Jan, 2011
New York City

The Nikkei index inched higher to reach its eight-month peak and the euro gained against the yen. Japan

[R]5:00 PM Tokyo, Japan – The Nikkei index inched higher to reach its eight-month peak and the euro gained against the yen. Japan’s current account surplus drops 15.7% to 926.2 million yen in November. Domestic investors remain net buyers of mid-term and long-term foreign bonds for the sixth year in a row in 2010.[/R]

Stocks in Tokyo gained and the yen declined against the dollar and the euro. Investors appear to have turned cautious ahead of earnings and continued uncertainty in the euro-zone. Japan confirmed its participation in the sovereign bond offering but investors fear that recent bond offering yields from Greece, Portugal and Spain are unsustainable.

The Nikkei 225 Stock Average closed up 0.02% or 2.12 to 10,512.80.

Japanese investors were net buyers of foreign bonds, both mid-term and long-term to the tune of 21.94 trillion yen in 2010, for the sixth year in a row driven by aggressive buying of U.S. government bonds.

Overseas investors were also net buyers of Japanese stocks for the second year in a row buying a net of 1.83 trillion yen of stocks in 2010.

Japan’s current account surplus fell 15.7% to 926.2 million yen in November from a year ago month, the first drop in three months, according to preliminary data released by the Finance Ministry today.

The trade and services balance dipped 63.6% to 160.4 billion yen. The trade logged a 259.7 billion yen surplus, and services posted a deficit of 99.3 billion yen.

Abu Dhabi National Oil Co, or ADNOC, told the visiting Japanese Trade Minister yesterday that rights to offshore oil fields held by a Japanese firm will be extended for 30 more years beyond the expiry date of 2012.

Economy, Trade and Industry Minister Akihiro Ohata asked ADNOC to renew the rights held by Cosmo Oil C and ADNOC. Chief Executive Yousef Omair Bin Yousef said that the contract would be extended for a 30-year period and some additional rights would also be awarded.

Lending by banks in Japan fell 1.9% from a year ago to 396.3 trillion yen in 2010, the first decline in five years, the Bank of Japan said today.

The consumption tax rate should be raised in stages to 17% by fiscal year 2017, the Japan Association of Corporate Executives said in a report released on Tuesday.

The report suggests the lifting of consumption tax rate, which stands at 5% now, to 10% in fiscal year 2013, followed by an increase to 15% in fiscal year 2015 and ultimately to 17% in the fiscal year 2017. It said the resulting revenue could be used as a stable source of funding for basic pension and regional finances.

Euro-zone sovereign debt anxiety is subsiding somewhat after Japan confirmed that it will participate in the region’s bond offering.

The euro gained against the yen, after Yoshihiko Noda Japan’s Finance Minister said his government would use some of its $1.096 billion foreign exchange reserves to buy European government bonds.

Mitsubishi Fuso Truck & Bus Corp said Tuesday that its parent firm Daimler AG raised its stake in the Japanese truck maker from 85% to 89.2% in a private placement.

As a result Fuso’s capital increased by 30 billion yen, enough to pull itself out of the 16.9 billion yen in negative net worth in 2009.

Stock Movers

Mizuho Financials added 3.07% to 168 yen while Mitsui Fudosan gained 2.97% to 1,731 yen.

Canon Inc stayed unchanged at 4,155 yen and Fukuoka Financials gained 1.68% to 364 yen.

Honda Motor Co added 1.38% to 3,310 yen and Mazda Motor gained 1.18% to 258 yen.

Mitsubishi UFJ added as much as 3.62% to 458 yen. Shinsei Bank rose 3% to 103 yen.