• Kyodo, Bloomerg

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The current account surplus shrank 64.3 percent in August from a year earlier to ¥407.5 billion, its lowest level in more than two years, on rising imports amid higher commodity prices, the government said Tuesday.

The balance of international payments, considered the widest gauge of trade for a country, fell for the sixth straight month, also affected by sluggish exports in the aftermath of the March earthquake and tsunami. But it remained in the black, given what Japan earns from its overseas investments.

The surplus was the smallest since January 2009, when the balance fell into the red with a deficit of ¥132.7 billion amid sharp declines in exports due to the global financial turmoil following the Lehman Brothers bankruptcy in September 2008.

“Sluggishness in major trading partners will put a drag on exports,” Kiichi Murashima, chief economist at Citigroup Global Markets Japan Inc., said before the report was released. “The relative stability of the Japanese economy compared with overseas nations will lead to an even higher yen.”

Slowing growth in the U.S. and Europe, together with a strengthening yen, are sapping demand for Japanese products, threatening to derail the nation’s recovery from three quarters of economic contraction. The Liberal Democratic Party last week urged the government to step up currency market intervention to counter the yen’s appreciation.

The yen, which has risen 5.8 percent so far this year against the dollar, touched a postwar high of 75.95 on Aug. 19. The yen traded at 76.67 per dollar at 8:53 a.m. in Tokyo, little changed from 76.70 before the report.

“Manufacturers are suffering from yen appreciation,” said Takuji Okubo, chief Japan economist at Societe Generale in Tokyo. “The global gloom is definitely hurting the domestic side of the Japanese economy through weaker business sentiment.”

The balance of trade in goods registered the first deficit in three months of ¥694.7 billion, compared with the ¥170.6 billion surplus marked in the same month a year before, the Finance Ministry said in a preliminary report.

Exports grew 4.0 percent to ¥5.1063 trillion for the first increase in six months. But on a month-on-month basis, the figure translated into a seasonally adjusted 0.7 percent fall.

Japanese exports have been recovering from the earlier sharp slides caused by the March 11 disaster, as major manufacturers have fully restarted their operations. But some analysts point to the gloomier outlook for the global economy, issuing a warning that the country’s exports may recover only at a snail’s pace or may even fall temporarily.

Imports grew 22.4 percent — the sharpest increase in more than a year — to ¥5.8011 trillion for the 20th consecutive month of gain, reflecting higher prices for such mineral fuels as crude oil, liquefied natural gas and petroleum products, necessary for thermal power generation.

Commodity imports by Japan have been increasing as many utilities have restarted their thermal power stations while nuclear power generation remains stalled following the crisis at the Fukushima No. 1 nuclear power plant.

The deficit in services trade, which covers such money flows as the payment of travel and transport costs, continued to expand. It stood at ¥182.6 billion, compared with ¥76.8 billion a year before. The number of foreigners traveling to Japan has been declining, especially after the earthquake and the nuclear crisis, according to the ministry.

Still, the overall balance of payments continued to mark a surplus, supported by huge gains in the income account, which mainly reflects Japanese investors’ earnings on foreign direct and portfolio investments.

The surplus in the income account grew 18.2 percent to ¥1.3539 trillion, the fifth straight monthly gain, on increased dividend payments from securities investments, the ministry said.

Separate data released by the ministry showed the country’s exports rose 1.0 percent in the first 20 days of September from a year earlier to ¥3.76492 trillion on increased shipments of vehicles and auto parts, an additional sign of economic recovery from the natural disaster.

Imports gained 12.7 percent to ¥3.58908 trillion on rising oil prices, while the trade balance on a customs-cleared basis marked a ¥175.84 billion surplus, down 67.6 percent but the first black ink in six months on a first 20-day basis.

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