Japanese PM’s advisers call for improvement in current account as yen weakens

Women wearing protective masks walk in a shopping district, amid the coronavirus disease (COVID-19) pandemic, in Tokyo, Japan, February 15, 2022. REUTERS/Kim Kyung-Hoon

TOKYO, April 27 (Reuters) – Advisers in Japanese Prime Minister Fumio Kishida’s leadership panel urged the government on Wednesday to prevent the current account surplus from shrinking further to avoid hurting the foreign exchange market.

Japan has long boasted a large current account surplus, a source of confidence in its yen, but soaring fuel import costs and slowing exports amid the Ukraine crisis are creating a trade deficit, which hurts Japan’s balance of payments.

Japan’s shrinking current account surplus helped push the yen to a two-decade low past 129 yen at the start of the month. It has traded around 128 yen to the dollar since then.

“The persistent decline in the current account surplus could have an impact on financial and monetary markets,” said the four private sector advisers to the Council for Economic and Fiscal Policy.

The 11-member senior advisory board is made up of ministers, lawmakers and Bank of Japan Governor Haruhiko Kuroda.

“We need to build an economic structure that is resilient to external shocks,” the advisers said in a proposal presented at a panel meeting.

Councilors also called for measures including decarbonisation efforts, such as early restart of nuclear reactors and energy saving, export of agricultural products and promotion of inbound tourists to try to improve the account balance. fluent.

“We need to resume entry intended for tourism in stages to help overseas tourists recover from the dip ’caused by the COVID-19 pandemic,” the advisers said.

Japan’s tourism industry has called on the government to reopen borders to more visiting tourists, which was a rare bright spot for the world’s third-largest economy until the COVID-19 outbreak more than two years ago.

Japan recently eased entry restrictions for business travelers and students by lifting the daily cap on international arrivals, after coming under fire for its strict border measures.

Reporting by Tetsushi Kajimoto, editing by William Maclean

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