Japan posted 754.1 billion yen (9. 62 billion U.S. dollars) in trade deficit in August, according to a government report released on Thursday.
The balance of goods trade remained in the red for the second straight month, the Finance Ministry said in a preliminary report.
Exports declined 5.8 percent to 5,045.9 billion yen for the third straight month. Imports fell 5.4 percent to 5,800.0 billion yen, registering the sharpest decline in nearly three years.
The strong yen has bit into exports while demand was slump in crisis-stricken Europe. Exports to the European Union plunged 22.9 percent to 477.9 billion yen, marking consecutive falls for almost a year.
Meanwhile, the country's energy imports have risen following closures of most of its nuclear reactors.
Exports to Asia -- Japan's biggest overseas market -- declined 6.7 percent overall to 2.84 trillion yen. And exports to China, Japan's biggest single foreign market, shed 9.9 percent to 966.3 billion yen. Even before the simmering territorial row between the two neighbors flared, exports to China were weakening.
Though the deficit for August was lower than the more than 800 billion yen that some analysts had forecast, prolonged tepidity in Europe and recent tensions with China, suggest the situation will likely persist in coming months.
In a bid to spur growth and cushion the impact of the strong yen on exporters, the Bank of Japan Wednesday announced additional monetary easing steps, extending its asset-buying scheme by 10 trillion yen and the duration of the program.
"There remains a high degree of uncertainty about the global economy," the bank said, adding that overcoming deflation and putting domestic economy back on track was a "critical challenge." (1 U.S. dollar = 78.3 yen)