Bank of Japan increases asset purchase program Export and Imports dropped in August

The Bank of Japan has followed Federal Reserve and European Central Bank with some fresh monetary stimulus in order to boost the Japanese economy. The BoJ has announced to increase the size of is asset purchasing program which is its only monetary policy tool available after already record low interest rate. It has increased the size of its asset purchase program by 10 trillion yen (USD 126 billion) to 80 trillion Yen. It will spend 5 trillion yen to purchase short term government bond and rest 10 trillion yen to purchase longer term government bonds.

At the same time Japanese exports and imports declined in August, which raises fresh concern about the economy. Japan-s exports and imports fell by 5.8% and 5.4% respectively in August compared to same month last year. The main reason behind this drop in import was lower domestic demand which is a fresh concern now. Also the current tension with China, Japan-s biggest trading partner, is expected to exports as well in the current and future months.