Japan remains top creditor as net foreign assets rise

TOKYO, May 27 (Reuters) – Japan’s net foreign assets hit a record high in 2021, maintaining its position as the top creditor for 31 consecutive years, the Ministry of Finance (MOF) said on Friday, likely bolstering the yen’s status as a safe haven despite its recent weakening.

The net worth of assets held by the Japanese government, businesses and individuals stood at a record high of 411 trillion yen ($3.24 trillion) at the end of last year, up 5, 6 billion yen – the largest increase ever.

The increase was driven by higher outward direct investment and an 11% gain in assets valued in yen in dollar terms.

The data could allay some concerns over the currency’s recent sharp drop to its lowest level in two decades above 131 yen to the dollar, which has raised concerns about Japan’s purchasing power.

Japan’s net foreign assets were 1.3 times greater than those held by Germany, the world’s second largest creditor, followed by Hong Kong and China, at the end of 2021.

Gross foreign assets stood at 1,249.9 trillion yen and foreign debt at 838.7 trillion yen, bringing Japan’s net foreign assets to 411.2 trillion yen.

Separate data confirmed Japan’s current account surplus at 15.5 trillion yen in 2021, down 1.2% from a year earlier, with primary income gains worth 20,500 billion yen adding to a trade surplus of 1.7 trillion yen.

The data underscored the view that Japan’s strong revenue gains from its overseas investments more than offset a weak trade balance, helping to maintain the yen’s status as a safe-haven currency.

($1 = 126.8400 yen)

Reporting by Tetsushi Kajimoto Editing by Shri Navaratnam

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