The Japanese yen is posting modest gains against its US counterpart on Thursday after the Chinese government encouraged renewed economic cooperation with the worldâs third-largest economy. The yen received a slight shot in the arm on various surveys that show a boost in key sectors.
This year, the US has engaged in a bitter trade dispute with China, instituting a series of tariffs worth tens of billions of dollars on Chinese goods. Washington has suggested that it is ready to embark upon a trade spat with Tokyo, which maintains a trade surplus, buoyed by automobile exports.
Noticing the writing on the wall, China is attempting to improve economic relations with Japan.
Speaking to a group of Japanese leaders on Wednesday, Chinese Premier Li Keqiang urged the private sector to bolster economic cooperation with their Beijing counterparts. With tit-for-tat trade retaliation only escalating, Beijing thinks it would be wide to âprotectâ and âdevelopâ trade between both countries.
Along with Japan, we would like to protect the multilateral trade system and develop free trade.
His remarks come as Bank of Japan (BOJ) board member Makoto Sakurai warned that global trade protectionism is producing uncertainty in the international marketplace, resulting sluggish economic growth projections for Japan. The BOJâs policy board projects that the national economy would grow 1.5% in 2019 and just 0.8% in 2020 and 2021.
Thereâs a risk that growth could fall short of such main projections depending on the extent of protectionist moves and capital outflow from emerging economies.
Analysts are confident that the Japanese economy can weather the storm, arguing that recent data should provide Tokyo the momentum it needs.
The September Nikkei Japan Manufacturing Purchasing Managersâ Index (PMI) climbed month-on-month, the Japan Finance Corp (JFC) Monthly Survey on small- and medium-sized enterprises trends rose month-on-month, the consumer confidence index (CCI) advanced month-on-month in September, and the durable goods index edged up.
The USD/JPY currency pair tumbled 0.21% to 112.03, from an opening of 112.27, at 20:03 GMT on Thursday. The GBP/JPY rose 0.15% to 148.31, from an opening of 148.13.
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