Japan exports beat forecasts in May at fastest pace since late 2022
Japan's exports grew at the fastest pace since late 2022 in May, beating forecasts and supporting the Bank of Japan's gradual tightening path, while the trade deficit narrowed more than expected, offering modest support for the yen.
Japan's exports rose at the fastest pace since late 2022 in May, beating market forecasts and reinforcing the case for the Bank of Japan to continue its gradual monetary tightening. The data, released Wednesday, showed exports growing for the ninth consecutive month, driven by robust demand for semiconductors and AI-related equipment, which has proven resilient to geopolitical disruptions.
The trade deficit narrowed more sharply than expected to 378.7 billion yen, compared with a consensus estimate of 564.6 billion yen. The improvement was partly due to a 28.5% plunge in crude oil import values, reflecting the Hormuz Strait disruption rather than weak domestic demand. If the strait reopens under the US-Iran framework, energy import costs could normalize in coming months, further supporting Japan's trade balance.
For currency traders, the stronger export data and narrower deficit provide modest support for the yen at the margin, though the currency remained little changed following the release. The BoJ's tightening path remains data-dependent, and sustained export growth could strengthen the case for further rate hikes. Traders can monitor the yen's reaction on NowPrice's live FX dashboard. Next focus will be on the BoJ's policy meeting minutes and any commentary on the impact of geopolitical risks on the trade outlook.