TOKYO -- Foreign exchange market players are looking to Japan's current-account surplus for the first time in a long time, as the country's surplus is rising due to the slump in crude oil prices. With the current account moving ahead of dollar-yen exchange rates, the yen naturally draws buying, given the supply-demand balance of the yen and the dollar.
The spread between interest rates on two-year U.S. and Japanese government bonds has long been the center of attention in relation to the yen. Before Shinzo Abe became the prime minister again in December 2012, the yen had appreciated against the dollar because Japan was losing to its Western rivals in the monetary easing race. The yen had risen as the spread between interest rates on two-year U.S. and Japanese government bonds narrowed.