Japanese yen sinks to 8-month low on fiscal health worries

By Mucahithan Avcioglu

ISTANBUL (AA) — The Japanese yen fell to an eight-month low of 152 per US dollar on Wednesday, as concerns over Japan’s fiscal health grew and expectations for an interest rate increase by the Bank of Japan weakened.

The yen traded around 152.4 against the US dollar, down about 0.3% as of 0820GMT.

Japan’s benchmark Nikkei 225 ended a four-day winning streak, slipping 0.45% to 47,734.99 points, as investors locked in profits after the index closed at a record high the previous day.

The yen’s slide deepened after Liberal Democratic Party lawmaker Sanae Takaichi, a fiscal dove who favors loose monetary policy, was elected party leader and is expected to become prime minister later this month, according to Kyodo News.

At one point, the yen touched its lowest level against the euro since the single European currency was introduced in 1999, falling to the 177 range.

The weaker yen lifted exporter shares by boosting overseas earnings when repatriated. But declines overnight in US semiconductor and AI stocks triggered selling in some large Japanese tech names, weighing on the Nikkei.

- Current account surplus narrows

Japan’s current account surplus shrank 4.8% year on year in August to 3.78 trillion yen ($24.9B) as returns on foreign investments fell, the Finance Ministry said in a preliminary report Wednesday.

Despite the drop, the balance — one of the broadest measures of Japan’s trade and investment flows — stayed positive for a seventh straight month and was the second-largest on record for August.

Primary income, which tracks Japanese earnings from overseas investments, dropped 11.5% to $28.2B as dividends from banking, insurance and auto subsidiaries abroad declined.

Goods trade swung to a $694.8M surplus after a $2.5B deficit a year earlier. Imports fell 6% to $54.1B, partly on cheaper crude oil. Exports slipped 0.4% to $54.8B as shipments of autos to the US decreased after tariffs imposed by President Donald Trump.