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17
ACTION EA-09
INFO OCT-01 EUR-12 ISO-00 AID-05 CIAE-00 COME-00 EB-07
FRB-01 INR-07 NSAE-00 USIA-15 TRSE-00 XMB-04 OPIC-06
SP-02 CIEP-02 LAB-04 SIL-01 OMB-01 NSC-05 SS-15
STR-04 CEA-01 L-03 H-02 PA-02 PRS-01 /110 W
--------------------- 030773
P R 260857Z JAN 76
FM AMEMBASSY TOKYO
TO SECSTATE WASHDC PRIORITY 6357
NFO RUDKEBQ/AMEMBASSY BERN 668
AMEMBASSY BONN
AMEMBASSY BRUSSELS
AMEMBASSY THE HAGUE
AMCONSUL HONG KONG
AMEMBASSY LONDON
AMEMBASSY LUXEMBOURG
AMEMBASSY PARIS
AMEMBASSY ROME
USMISSION EC BRUSSELS
USMISSION OECD PARIS
UNCLAS TOKYO 1137
DEPT PASS TREQSURY, CEA AND FEDERAL RESERVE
E.O. 11652: N/A
TAGS: EFIN, JA
SUBJECT: JAPAN'S BALANCE OF PAYMENTS IN DECEMBER - PROVISIONAL
1. SUMMARY: JAPAN'S B/P POSITION IMPROVED VERY SHARPLY IN
DEC, ACCORDING TO PROVISIONAL B/P STATISTICS. ALL THREE BAL-
ANCES (CURRENT, BASIC, OVERALL), MOVED BACK TO SURPLUSES AFTER
FOUR MONTHS OF DEFICITS, MAINLY DUE TO LARGE $680 MIL INCREASE
IN TRADE SURPLUS. NET INFLOW OF NON-MONETARY SHORT-TERM FUNDS
(REVERSED FROM NET OUTFLOW IN NOV), ALSO CONTRIBUTED TO IM-
PROVEMENT. OFFICIAL SETTLEMENTS' BALANCE, HOWEVER, REMAINED
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AT DEFICIT SINCE COMMERCIAL BANKS' EXPORTED $760 MIL IN
SHORT-TERM FUNDS DURING DEC. THE YEN WEAKENED AGAINST
DOL AROUND MIDDLE OF DEC TO 306.85 YEN/DOL BUT STRENGTH-
ENED SLIGHTLY TOWARD END OF THE MONTH TO 305.00 YEN/DOL.
JAPAN'S OFFICIAL RESERVES DECLINED BY $143 MIL IN DEC.
FOR YEAR AS A WHOLE, B/P IMPROVED SUBSTANTIALLY IN 1975
COMPARED WITH 1974. CURRENT ACCOUNT DEFICIT WAS TRIMMED
TO $731 MIL IN CONTRAST TO 1974 DEFICIT OF $4,693 MIL.
BASIC BALANCE DEFICIT WAS $1,065 MIL IN 1975, A SHARP
REDUCTION FROM $8,574 MIL DEFICIT OF PRIOR YEAR. END
SUMMARY.
2. UNADJUSTED TRADE SURPLUS INCREASED VERY SHARPLY
BY $676 MIL TO $1,110 MIL IN DEC FROM NOV LEVEL, RE-
FLECTING IN PART, USUAL SEASONAL JUMP IN EXPORTS.
SEASONALLY ADJUSTED TRADE SURPLUS ALSO INCREASED BY
$298 MIL TO $433 MIL IN DEC. EXPORTS (F.O.B., SEASON-
ALLY ADJUSTED), INCREASED BY $496 MIL TO $4,861 MIL
IN DEC FROM NOV (AS MUCH AS 11.4 PERCENT), AND IM-
PORTS (F.O.B., SEASONALLY ADJUSTED), ROSE LESS SHARPLY
THAN EXPORTS BY $198 MIL (4.7 PERCENT), TO $4,428 MIL.
3. IN DEC, NET PAYMENTS FOR SERVICES AND TRANSFERS
WERE $480 MIL, REMAINING AT THE USUAL MONTHLY LEVEL.
AS RESULT, CURRENT BALANCE IN DEC RECORDED LARGE $630
MIL SURPLUS AS COMPARED TO $13 MIL DEFICIT IN NOV.
4. NET OUTFLOW OF LONG-TERM CAPITAL DECLINED
SLIGHTLY BY $10 MIL TO $150 MIL IN DEC. BOND ISSUES
ABROAD BY JAPANESE ENTERPRISES WERE VERY ACTIVE AND
RECORDED A NET INFLOW OF $204 MIL IN DEC, TWICE THE
AMOUNT IN NOV. FOREIGN PURCHASES AND SALES OF JAPANESE
SECURITIES ALMOST BALANCED IN DEC IN CONTRAST TO $83 MIL
NET FOREIGN PURCHASES IN NOV. ON THE OTHER HAND, THERE WAS
A SHARP RISE IN EXPORTS OF JAPANESE CAPITAL AS A RE-
SULT OF INCREASED TRADE CREDITS FOR FINANCING JAPAN'S
PLANT EXPORTS (ON A DEFERRED PAYMENT BASIS). OVERSEAS
DIRECT INVESTMENT AND LENDING ABROAD BY JAPANESE ENTER-
PRISES REMAINED AT THE USUAL MONTHLY LEVEL.
5. IN DEC, NON-MONETARY SHORT-TERM CAPITAL, IN-
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CLUDING ERRORS AND OMISSIONS, RECORDED NET INFLOW OF
$130 MIL IN CONTRAST TO $228 MIL NET OUTFLOW IN NOV.
AS RESULT, OVERALL BALANCE IMPROVED DRAMATICALLY BY
OVER $1 BIL IN DEC TO $610 MIL SURPLUS FROM $401 MIL
DEFICIT IN PRIOR MONTH.
6. SHARP IMPROVEMENT IN OVERALL BALANCE, HOWEVER,
COMPLETELY OFFSET BY VERY LARGE NET OUTFLOW OF COM-
MERCIAL BANKS' SHORT-TERM FUNDS. COMMERCIAL BANKS'
SHORT-TERM NET LIABILITY POSITION REVERSED THE TREND
AND RECORDED $760 MIL NET OUTFLOW IN CONTRAST TO $179
MIL NET INFLOW IN NOV. JAPAN'S PUBLISHED OFFICIAL
RESERVES DECLINED LESS SHARPLY BY $143 MIL FROM NOV
(THAN $234 MIL DROP DURING PRIOR MONTH), TO $12,815
MIL. GOLD AND FOREIGN EXCHANGE TOTALLED $11,491 MIL,
GOLD TRANCHE $804 MIL, AND SDR'S $520 MIL.
7. FOLLOWING ARE PRELIMINARY MOF DATA ON DEC BAL-
ANCE OF PAYMENTS IN MIL DOLS (IMF BASIS, NOT SEASONALLY
ADJUSTED). RECEIPTS, AS WELL AS INCREASE IN RECEIPTS
OR DRECREASE IN PAYMENTS, ARE SHOWN AS PLUS; QUOTE MIN
UNQUOTE INDICATES OPPOSITE.
DECEMBER NOVEMBER
PROVISIONAL REVISED CHANGE
(1) CURRENT BALANCE 630 MIN 13 643
TRADE BALANCE 1,110 434 767
EXPORTS 5,790 4,310 1,480
IMPORTS MIN 4,680 MIN 3,876 MIN 804
SERVICES AND
TRANSFERS MIN 480 MIN 447 MIN 33
(2) LONG-TERM CAPITAL MIN 150 MIN 160 10
(3) BASIC BALANCE 480 MIN 173 653
(4) NON-MONETARY SHORT-
TERM CAPITAL AND
ERRORS AND OMIS
SIONS COMBINED 130 MIN 228 358
(5) OVERALL BALANCE 610 MIN 401 1,011
(6) COMMERCIAL BANKS'
SHORT-TERM NET
POSITION MIN 760 179 MIN 939
(7) OFFICIAL SETTLE-
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MENTS BALANCE MIN 150 MIN 222 72
8. SEASONALLY ADJUSTED TRADE DATA (IMF BASIS), AS
FOLLOWS:
DECEMBER NOVEMBER
PROVISIONAL REVISED CHANGE
EXPORTS 4,861 4,365 496
IMPORTS MIN 4,428 MIN 4,230 MIN 189
BALANCE 433 135 298
9. NOTE: RATES OF EXCHANGE USED BY MOF TO CONVERT
TO DOL BASIS WERE 302.46 YEN PER DOL FOR NOV 1975 AND
305.60 YEN PER DOL FOR DEC 1975.
10. IN CALENDAR YEAR 1975, JAPAN'S B/P POSITION IM-
PROVED SHARPLY COMPARED WITH 1974. NEARLY $3.7 BIL IN-
CREASE IN TRADE BALANCE SURPLUS WAS RESULT OF EXPORTS
MAINTAINING SAME LEVEL DESPITE WORLD RECESSION, WHILE
IMPORTS FELL 6 PERCENT IN RESPONSE TO SLOWDOWN IN DO-
MESTIC ECONOMY. DRAMATIC REDUCTION IN NET OUTFLOW OF
LONG-TERM CAPITAL WAS MAINLY DUE TO LARGE NET PURCHASE
OF JAPANESE SECURITIES BY FOREIGNERS (IN CONTRAST TO
NET SALE IN 1974), AND SHARP INCREASE IN JAPANESE BOND
FLOTATIONS ABROAD IN 1975. FOLLOWING TABLE SHOWS
JAPAN'S B/P IN MIL DOLS FOR 1974 AND 1975 BASED ON
PRELIMINARY DATA FOR DEC.
1974 1975
MERCHANDISE TRADE 1,436 5,141
EXPORTS 54,480 54,765
IMPORTS 53,044 49,624
CURRENT ACCOUNT -4,693 -731
LONG-TERM CAPITAL -3,881 -334
BASIC BALANCE -8,574 -1,065
CHANGE IN OFFICIAL
RESERVES PLUS 1,272 -703
HODGSON
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