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on september 19, the usd/jpy exchange rate rose by about 0.53% to 143.03. the depreciation of the yen is closely related to the fact that japan's economic data has not shown a significant improvement.

the preliminary statistics released by the ministry of finance of japan on the 18th showed that japan's trade deficit in august was 695.3 billion yen, marking the second consecutive month of trade deficit. the growth rate of japan's exports in august was much lower than expected, with exports increasing by 5.6% year-on-year, lower than 10.2% in the previous month. this result was also lower than the 10.6% generally expected by economists. the main reason was that automobile exports fell by 9.9%, and the shipments of construction and mining machinery also fell. among them, japan's exports to the united states fell for the first time in nearly three years, and exports to europe fell by 8.1%. this shows that the slowdown in global demand is dragging down the fragile recovery of the japanese economy. at the same time, this is also related to the continuous increase of 13% in the yen against the us dollar in the past three months. since the bank of japan raised interest rates in july, the yen exchange rate has risen from 160 yen to 1 us dollar to 140 yen. the decline in exports has once again lowered japanese manufacturers' expectations for the economy. the latest monthly opinion poll showed that business confidence among large japanese manufacturers fell to a seven-month low in september, a sign of economic fragility.

in addition, the recently released revised figures of japan's gross domestic product (gdp) for the second quarter showed that real gdp, excluding price changes, grew by 0.7% month-on-month, or 2.9% on an annualized basis, a slight downward adjustment from the preliminary statistical results released on august 15. previous preliminary statistical results showed that japan's real gdp grew by 0.8% month-on-month in the second quarter of this year, or 3.1% on an annualized basis. the speed of inflation recovery also exceeded market expectations. data showed that tokyo's cpi rose by 2.6% year-on-year in august, higher than the previous value of 2.2% and the market expectation of 2.2%; tokyo's core cpi, excluding fresh food, rose by 2.4% year-on-year in august.

another important observation angle is that japan's aging population is further intensifying. the ministry of finance of japan announced the latest estimated data on the number of elderly people over 65 years old in the country on september 16, japan's annual "respect for the aged day". the results show that as of september 15, the elderly population in japan was 36.25 million, an increase of 20,000 from last year, accounting for 29.3% of the total population, up 0.2 percentage points, both of which are the highest records since comparable data were available in 1950. with an aging rate of nearly 30%, japan has once again become the most aging country in the world. according to data from the united nations, in terms of aging, italy (24.1%) and finland (23%) ranked second and third respectively. data previously released by the ministry of finance of japan showed that as of january 1, 2024, excluding foreigners living in japan, the total population of japan was about 120 million, a decrease of about 860,000 from the previous year, a decrease for 15 consecutive years. as we all know, aging has an adverse impact on economic development.

against the backdrop of weaker-than-expected economic data, the market expects the bank of japan to maintain a stable monetary policy at the meeting that ends on the 20th, but will not rule out the possibility of further interest rate hikes in the future. on september 20, the bank of japan unanimously passed the latest interest rate resolution with a 9:0 vote, maintaining the normal interest rate level unchanged at 0.15%-0.25%, which is also in line with market expectations.

previously, 19 of the 36 economists surveyed by the japan center for economic research predicted that the bank of japan would raise interest rates again in december. bloomberg senior economist taro kimura believes that the bank of japan will maintain interest rates stable in its september interest rate decision and will discuss whether it has the conditions to raise interest rates again this year. thanks to the wage increase agreement reached in japan's labor-management negotiations this spring, more wages have increased, and inflation has maintained rapid growth supported by rapid wage growth. in order to be consistent with its guidance, the bank of japan needs to raise interest rates in october, when the central bank will update its inflation forecast. he expects the bank of japan to raise interest rates by 25 basis points to 0.50% at its october interest rate meeting. in addition, toshio sasaki, a strategist at japan's fukuoka financial group, pointed out that "japan's real interest rate is still hovering in the negative range. from the perspective of the balance of payments, capital outflows are still continuing, and there is limited room for the appreciation of the yen."

however, the monthly economic report for september released by the japanese cabinet office on the 18th showed that the japanese government still believes that although the economy is somewhat weak, it is still recovering at a moderate pace.

■ our reporter lu hong