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    In September, Japan’s year-on-year imports increased by 3.3%, exceeding the expected 0.6% rise.

    by VT Markets
    /
    Oct 22, 2025
    Japan’s imports rose by 3.3% year-on-year in September, which was much higher than the expected 0.6%. This shows that Japan’s economy is stronger than we thought. The unexpected increase in imports suggests that both consumers and businesses are becoming more active. This is more than just a small surprise; it signals that we might need to rethink how fragile the Japanese economy really is.

    Ongoing Inflation and Monetary Policy

    This growth is happening alongside ongoing inflation, making things tricky for the Bank of Japan. For instance, the core Consumer Price Index (CPI) for September was released last week and showed a stubborn 2.9%, remaining above the 2% target for several months. The combination of strong demand for imports and high inflation means there’s a greater chance the central bank may take a tougher stance. For currency traders, this strengthens the argument for a stronger yen. The USD/JPY exchange rate is still around 155, a level similar to the volatility seen in 2024, increasing pressure on policymakers. Traders may want to consider call options on the JPY or put options on USD/JPY, as we anticipate possible actions or statements from the central bank in the coming weeks. This situation also affects interest rate derivatives since the reasons for keeping negative interest rates are fading. We’re seeing yields on Japanese Government Bonds slowly rising, with the 10-year JGB now at over 1.1%, the highest since 2013. These import figures may lead traders to expect a rate hike sooner than we thought, possibly before the year’s end.

    Equity Market Caution

    Looking at the stock market, this situation calls for caution. An interest rate hike could raise borrowing costs for companies and slow down the Nikkei 225’s growth. It might be wise to buy protective puts on the index to guard against potential losses if monetary policy changes. Create your live VT Markets account and start trading now.

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