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Japan’s May Current Account Surplus Drops 46 Percent

July 8, 1996

TOKYO (AP) _ A continuing surge in imports and a rise in international travel helped the surplus in Japan’s broadest measure of trade shrink 46 percent last month, the Ministry of Finance said Monday.

The plunge in the size of the surplus in recent months has tended to lessen tension between Japan and its trading partners and support the dollar against the yen.

In May, the current account surplus dropped to 361.2 billion yen ($3.25 billion) from 674.3 billion yen in the same month last year. The surplus shrank 45 percent in April vs. a year earlier.

The figures, which are not adjusted for seasonal factors, represent the value of the merchandise, services and investment that flow in and out of the country.

The dollar was trading just below 111 yen late Monday afternoon following the news. The U.S. currency fell as low as 80 yen last year due in part to Japan’s bulging surplus, but has rebounded as the surplus has been reduced.

Imports jumped 36 percent last month compared with May 1995. Computers, petroleum, electronic components and cars were among the goods that helped imports rise for the 22nd straight month.

The rise in Japanese traveling abroad also kept money flowing from Japan to foreign countries.

While Japan’s imports are likely to keep rising, greater foreign demand for Japanese goods, in part caused by the weaker yen, is likely to reverse the decline in the surplus, analysts said.

``In terms of the decline in the current account we’ve probably seen it peak,″ said Yasushi Okuda, economist at BZW Securities Japan Ltd. ``The surplus will continue to drop, but at a much slower pace″ for the rest of the year, he said.

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