The yen falls sharply on the foreign exchange markets and, hey presto, within a year we have an emerging market meltdown on our hands. That was the picture in 1996-97, but today’s Japan is no longer the export powerhouse of former years.
At the dawn of Abenomics, some trading partners did indeed worry that Prime Minister Shinzo Abe was adopting a “beggar thy neighbour” policy that might trigger a 1930s-style breakdown of the international system.
Team Abe riposted that returning Japan to the path of growth would be good for everyone. They were right. Far from launching an export drive, Japan saw its trade deficit well-nigh double last year. Even the current account – bolstered by massive inflows of investment income – recorded a few sizeable monthly deficits.
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.