A Japanese yen note is seen in this illustration photo taken June 1, 2017. REUTERS/Thomas White

TOKYO, April 8 (Reuters) – Japan’s current account balance fell back into the black in February after its second-biggest deficit on record the previous month, offering policymakers some respite amid deteriorating economic fundamentals. Read more

Soaring fuel prices and a weak yen have widened Japan’s trade deficit in recent months, more than offsetting high returns on investment and pushing the country’s current account balance into the red.

The world’s third-largest economy posted a current account surplus of 1.6483 trillion yen ($13.28 billion) in February, Finance Ministry data showed on Friday, against a median market forecast for a surplus of 1. 4368 trillion yen.

This followed a deficit of 1.1887 trillion yen in January, the second largest deficit according to comparable data dating back to 1985. read more

The trade deficit narrowed to 176.8 billion yen in February from 1.6043 billion yen in January.

The primary income surplus, meanwhile, widened to 2.2745 trillion yen from 1.2813 trillion yen, although it was lower than the same month last year due to the decline in foreign investment returns, according to the data.

The lower trade deficit and the increase in the surplus of primary incomes helped bring the current account back into positive territory.

Japan is particularly vulnerable to soaring fuel and commodity prices, as it relies almost entirely on imports for energy, adding to uncertainties about its already fragile post-pandemic recovery. Read more

Some analysts have warned that the deterioration in Japan’s terms of trade and current account balance, if it persists, could erode market confidence in the country’s ability to service its debt and further weaken the yen. Read more

($1 = 124.1000 yen)

Reporting by Kantaro Komiya; Editing by Sam Holmes

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