Strong Yen Reduces the Size of Japan’s Trade Imbalance

Japan’s trade surplus fell in May, snapping a five-month upward trend, as the strong yen curtailed growth in exports, the government and economists said Thursday.

The surplus fell to an unadjusted $6.54 billion from $7.78 billion a year earlier, the Finance Ministry said.

The high yen has been helping to dampen exports by boosting the price of Japanese goods overseas, thereby making them less competitive, economists said.

But a great shrinkage in the surplus is highly unlikely this year even though the up trend should peak, said Soichi Enkyo, economist at Bank of Tokyo Ltd.

“This year the surplus is likely to remain around the same level,” he said.

The surplus was far below the average forecast by economists earlier this week. They predicted a surplus of $7.1 billion for May.

In April, the trade surplus climbed to $11.12 billion from $10.29 billion a year earlier.

But the surplus with the United States, which has been most critical of Japan’s trade imbalances, climbed to $3.04 billion in May from $2.83 billion a year earlier.