The Japanese yen's safe-haven status may be in jeopardy as rising import costs continue to weigh on the country's export sector and eat into its current account, analysts say.
"As Japan's current account condition continues to deteriorate, the yen's function as a safe-haven harbor may come into question," said Boris Schlossberg, currency analyst at BK Asset Management.
A nation's currency may obtain 'safe-haven status' if that country has a current account surplus, whereby exports exceed imports. As people abroad pay for these exports in the exporting country's currency, greater demand for that currency leads it to appreciate.
"In order for [the yen's] safe-haven status to disappear essentially Japan would have to lose its current account surplus," David Forrester, senior vice president at Macquarie told CNBC.
Rising import costs
"[The yen] is gradually losing [its safe-haven status] because of its deteriorating trade balance despite the weaker yen," Forrester said.
Japan posted its 21st consecutive monthly trade deficit this week amid a rise in the cost for energy imports following the shutdown of several nuclear plants after the Tohoku tsunami in 2011. Imports rose 18.1 percent on-year in March, while exports rose a mere 1.8 percent.
While the yen's 21 percent depreciation against the U.S. dollar last year due to Abenomics - Prime Minister Shinzo Abe's radical economic reform plan - should spur greater demand for Japanese goods, any resulting demand increase has not been enough to offset rising import costs.
However, any deterioration in the current account surplus due to weak trade data is unlikely to be quick. In February, Japan swung to a current account surplus for the first time in five months as income surplus - the portion of the current account that includes earnings from overseas investments - outweighed the country's trade deficit.