26th May 2023 – (Tokyo) The yen’s steep depreciation has led to Japan’s external assets reaching a record high in 2022, according to a report by the Finance Ministry on Friday. Japan’s net balance of external assets was at a record 418.63 trillion yen (2.99 trillion U.S. dollars) in 2022, up 0.2% from the previous year. The country’s external assets, including those held by firms and individuals, also reached a record high of 1,338.24 trillion yen (9.56 trillion dollars), marking the 14th straight annual increase.
The divergence of policies between the Bank of Japan and other major central banks, such as the U.S. Federal Reserve, has contributed to the yen’s weakness, which fell nearly 15% last year compared to the U.S. dollar. The Bank of Japan has maintained an ultra-loose policy, while other central banks have tightened their monetary policies.
The annual increase in the net balance of external assets was limited by the prices of foreign government bonds dropping in line with rising yields, said the Finance Ministry. Japan’s liabilities overseas rose 9.6% from the previous year to a record 919.61 trillion yen (6.57 trillion dollars), with non-Japanese residents increasing their direct investment in Japan.
According to the data, Japan remained the world’s largest creditor for the 32nd consecutive year in yen terms.
The country’s external asset balance continues to grow, buoyed by the yen’s depreciation and rising investment overseas. Japan’s net balance of external assets hit a record high of 418.63 trillion yen in 2022, up 0.2% from the previous year. This was boosted by the record high in external assets held by the Japanese government, firms, and individuals, which rose to 1,338.24 trillion yen, marking the 14th consecutive annual increase.
The yen’s weakening has been attributed to the divergence in policies between the Bank of Japan and other major central banks, such as the U.S. Federal Reserve, which have tightened their monetary policies. The Bank of Japan’s ultra-loose policy has also contributed to the yen’s weakness, which fell nearly 15% against the U.S. dollar last year.
Despite the annual increase in the net balance of external assets, the prices of foreign government bonds dropped in line with rising yields, limiting the growth of Japan’s external assets. Japan’s liabilities overseas rose 9.6% from the previous year to a record 919.61 trillion yen, owing to an increase in direct investment by non-Japanese residents. This marks the fourth consecutive year of expansion of liabilities overseas.
In yen terms, Japan has remained the world’s largest creditor for the 32nd consecutive year. The country’s sustained high levels of external assets and investments overseas have helped maintain its position as a significant financial player in the global economy.
As Japan’s external asset balance continues to grow, buoyed by the yen’s depreciation and rising investment overseas. Japan’s net balance of external assets hit a record high of 418.63 trillion yen in 2022, up 0.2% from the previous year. This was boosted by the record high in external assets held by the Japanese government, firms, and individuals, which rose to 1,338.24 trillion yen, marking the 14th consecutive annual increase.
