Japan's current account surplus rose more than expected in April thanks to firm exports and gains in investment income, a sign that the world's second-largest economy continues to enjoy a solid recovery.
The data did little to change views that the Bank of Japan will raise interest rates in the July-September quarter, but worries about that and sharp falls in U.S. Treasuries pushed Japanese government bond futures to a seven-year low.
Japan's current account surplus rose 50.3% in April from a year earlier to 1.9865 trillion yen ($16.33 billion), data from the Ministry of Finance showed on Wednesday.
It was above the market's median forecast of a 35.3 percent rise to 1.7888 trillion yen.
"The growth in the current account surplus basically traced that of the trade balance, with softness in U.S. exports offset by firm demand for Japanese goods in other regions such as Asia," said Takeshi Minami, chief economist at Norinchukin Research Institute.
The trade balance rose 34.7% to a surplus of 1.0342 trillion yen, with exports rising 7.3% and imports up 3.2%.
The income surplus, mainly gains made on overseas investments, rose 41.5% from a year earlier. Expansion in the income surplus has been a major reason behind firm rises in the current account surplus.
"The income account surplus has grown rapidly as interest rates overseas rose, pushing up interest rate income," said Takumi Tsunoda, an economist at Shinkin Central Bank Research Institute. "As Japanese firms began increasing their dividend payments, some of that income may be offset. But the income account surplus will likely keep rising as a trend," he said.
Many analysts expect Japan's central bank to keep the key overnight call rate target unchanged at a two-day policy meeting that ends on Friday.
The BOJ lifted the rate to a decade-high 0.50% from 0.25% in February, following its first rate hike in six years last July.
The BOJ has said it will boost interest rates gradually in line with the nation's steady economic expansion, already the longest in the postwar era.
Japan's economy grew 0.8% in January-March from the previous quarter, or an annualized 3.3%, outperforming both the United States and euro zone, revised government data showed on Monday.
Despite continued falls in consumer prices and wages, a recent series of firm economic indicators, including April's jobless rate at a nine-year low, has reinforced views that the next interest rate hike by the BOJ will be in the third quarter, most likely in August.