Japan’s [B]Current Account [/B]surplus narrowed for the third consecutive month, printing at 1171.2 billion yen in August versus 1265.6 billion yen in the previous month. Exports fell -7%, the most since January, outpacing a -4.5% decline imports. More of the same is likely in the months ahead as the Yen appreciates, making Japanese goods increasingly expensive for foreign buyers. Indeed, last week’s Tankan survey of large manufacturers (who primarily cater to the overseas buyers) revealed firms plan to slash capital investment at the fastest rate in over a decade on expectations that sales will fall -10.5% through the 2009 fiscal year (12 months ending April 2010), more than doubling the drop in FY2008. The currency looks set to extend gains after a trade-weighted index of its value broke higher out of a range that had contained prices since early March late last month.
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