Helped by weak yen, Japan remains top creditor as net external assets grow

Japan's net external assets hit a record amount in 2021, retaining its position as the top creditor for 31 years in a row, the Ministry of Finance (MOF) said on Friday, likely bolstering the yen's status as a safe-haven asset despite its recent weakening.

The net value of assets held by the Japanese government, businesses and individuals stood at a record high of 411 trillion yen ($3.24 trillion) at the end of last year, up 5.6 billion yen - the biggest increase ever.

The increase was driven by rises in direct investment overseas and an 11% gain in yen-valued assets based on dollar terms.

The data could ease some concerns about the currency's recent sharp drop to two-decade lows beyond 131 yen to the dollar, which has raised worries about Japan's purchasing power.

Japan's net external assets were 1.3 times than those held by Germany, the world's No.2 creditor, followed by Hong Kong and China, as of end-2021.

Gross external assets stood at 838.7 trillion yen and external debt came to 1249.9 trillion yen, bringing Japan's net external assets to 411.2 trillion yen.

Separate data confirmed Japan's current account surplus at 15.5 trillion yen in 2021, down 1.2% from a year before, with primary income gains worth 20.5 trillion yen adding to a trade surplus of 1.7 trillion yen.

The data underscored the view that Japan's hefty income gains from its overseas investment more than offsets a weak trade balance, helping keep the yen's status as a safe-haven currency.

($1 = 126.8400 yen)

(Reporting by Tetsushi Kajimoto

Editing by Shri Navaratnam)