Last year, the yen lost about 11% of its value against the dollar. This made the foreign assets that the Japanese government, businesses, and individuals owned worth more.
The value of Japan’s net external assets went up by a record 5.6 billion yen every year because of the value of its currency and the rise in direct investments overseas.
Japan’s weak yen and US stock market gains boosted net external assets, according to Daisaku Ueno, chief FX strategist at Mitsubishi UFJ (NYSE:MUFG) Morgan Stanley (NYSE:MS) Securities. He added that the data had no immediate impact on near-term currency moves. He added that the data had no immediate impact on the way currencies moved in the short term.
The data could ease some worries about the recent sharp drop in the value of the yen to more than 131 yen per dollar, which has made people worry about Japan’s ability to purchase things.
At the end of 2021, Japan had 1.3 times as many net external assets as Germany, the world’s No. 2 creditor, followed by Hong Kong and China.
Gross external assets were worth 1,249.9 trillion yen, and external debt was worth 838.7 trillion yen. This brought Japan’s net external assets to 411.2 trillion yen.
Additionally, a trade surplus of 1.7 trillion yen was added to Japan’s current account surplus of 15.5 trillion yen in 2020, a decrease of 1.2% from the previous year. Primary income gains of 20.5 trillion yen were also included in the overall surplus.
To maintain its status as a safe-haven currency, the Japanese yen relies on the country’s substantial income gains from its investments abroad, according to the latest data.
“However, in the medium to long term, the yen will no longer be viewed as a safe-haven currency due to Japan’s trade deficit and population decline,” Ueno said.
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