Japan Records ¥234.6 Billion September Trade Deficit Despite 4.2% Export Rise

Japan reported a merchandise trade deficit of approximately 234.6 billion yen in September 2025, significantly missing expectations of a surplus around 22 billion yen, though this deficit narrowed compared to the prior year. Exports rose 4.2% year-on-year, marking the first increase in five months, but still fell short of the anticipated 4.6% growth, while imports increased 3.3%, surpassing forecasts. The rise in exports was partly driven by robust shipments to Asian markets, offsetting declines to the U.S., where tariffs have previously impacted trade. The data comes amid Japan's recent political changes with the appointment of its first female prime minister, Sanae Takaichi, whose policies are expected to lead to a weaker yen and enhanced export competitiveness. The trade deficit and dovish monetary policy contrast with tightening policies in other major economies, contributing to a bearish outlook for the yen and supporting the U.S. dollar's strength globally. Market observers suggest that these dynamics make further yen depreciation and USD/JPY gains plausible in the near term.