Japan’s external net assets 418 trillion yen at the end of 2022, benefits from the weaker yen, the largest ever

THE NIKKEI via scoutAsia

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May 26, 2023 2 min read
Japan’s external net assets 418 trillion yen at the end of 2022, benefits from the weaker yen, the largest ever

On May 26, the Ministry of Finance announced that Japan’s external net assets were 418,628.5 billion yen at the end of 2022. The value of foreign-currency-denominated assets increased in yen terms as the yen weakened, reaching a record high. An increase in foreign net assets can lead to an increase in dividend and interest income from abroad, which can improve the current account balance and lead to an increase in the rating of government bonds.

External net assets are the “external assets” held overseas by Japanese companies, individuals, and government minus “external liabilities” to foreign investors. Foreign net assets increased slightly by 0.2% from the end of 2021, the fifth consecutive year of increase. It has been the world’s largest net creditor nation for 32 consecutive years.

The balance of foreign assets was 1.3382364 quadrillion yen, an increase of 6.5% from 2021. The increase is the 14th consecutive year of increase. Although the outstanding amount of assets invested in securities declined by 8.4% to 531.29 trillion yen, mainly due to the fall in bond prices caused by rising interest rates, the depreciation of the yen boosted the remaining outstanding amount of assets.

The yen exchange rate at the end of 2022 was 132.14 yen per dollar, a 14.8% depreciation of the yen and a 14.8% appreciation of the dollar from the end of 2021. The valuation of foreign-currency-denominated assets increased by 108.189 trillion yen due to the depreciation of the yen.

Outstanding external debt, which reflects foreign investment in Japan, increased by 9.6% to 919,607.9 billion yen. This is the fourth consecutive year of increase. The yen-equivalent value of foreign-currency-denominated debt increased by 27.869 trillion yen.

By country/region, Germany had the second largest amount of foreign net assets after Japan at the end of 2022, at 389,050.9 billion yen. China and Hong Kong followed at 335,780.7 billion yen and 233.6321 trillion yen, respectively. The largest net debtor country in the world is the US, with a net external debt outstanding of 2.1379298 quadrillion yen.