Japan experienced a trade deficit for the fourth month in a row in August, with a shortfall of 1.1 trillion yen ($7 billion), according to preliminary data from the Finance Ministry. This deficit was driven largely by rising global oil prices, which increased import costs. Japan's total imports surged 28% compared to the same period last year, reaching 11.15 trillion yen ($71.9 billion). Meanwhile, exports grew by 19.3% to 10 trillion yen ($64.5 billion), with a notable increase in the export of computer chips and automobiles. Exports to the U.S. rose sharply by 24.9% year-on-year, while imports from the U.S. climbed by 55.2%. In contrast, exports to the Middle East dropped by 5.2%, but imports from that region decreased slightly by 4.2%. Exports to Europe increased by 11%, although imports from Europe rose by 20.4%. The price of Brent crude oil, a major benchmark for global oil prices, has climbed significantly from around $60 per barrel to over $100, hitting a peak of $118 per barrel in April. This increase has added to Japan's import costs, contributing to the trade deficit. Meanwhile, the U.S. Federal Reserve is expected to raise its short-term interest rate for the first time in three years this week, aiming to combat high inflation. Treasury Secretary Scott Bessent has reportedly encouraged the Bank of Japan to consider raising its interest rates, which could help strengthen the yen. The yen has recently weakened against the U.S. dollar, trading at about 155 yen to the dollar. However, it briefly rose after a joint intervention by the U.S. and Japan to stabilize the currency. Some analysts predict the yen could fall further, possibly to 150 yen or lower, later this year. The Bank of Japan is set to meet later this week to decide on its benchmark interest rate, with financial markets expecting an increase from the current 1% to 1.25%. A stronger yen would make imports cheaper, which is beneficial for Japan’s economy, but it could hurt large exporters like Toyota Motor Corp. by reducing the value of their overseas sales when converted into yen. In response to these economic challenges, Japanese Prime Minister Sanae Takaichi has promised increased government spending and a reduction in the consumption tax on food, aiming to stimulate the economy and ease the burden on consumers.