Why is the Japanese Yen so strong? s1160083 Hiroyuki Kobayashi
SummaryThe Yen reached high value against theDollar in recently 15-year.The reason for the strengthen of the Yenis that the Yen is a main currency.In the historic perspective drawing, theidea of the strengthening of the Yen isnot new and expected.
Monetary TheoryWe focus all about demand and supply. Wecan say the following kinds of things.・When there is relatively more supply andless demand for the Yen, the Yen willweaken.・When there is more demand and lesssupply of the Yen, the Yen willstrengthen.
Monetary TheoryThat is to say, the strengthening Yenmeans an increasing request of the Yencompared to relatively less supply.The strength of a currency is influencedby trade and current accounts.・the trade cash flow・the investment cash flow
The trade cash flow・The export from Japan causes the demandthat the Yen buys a Japanese article for.・The import to Japan makes supply of theYen to buy other currencies to pay a rateof the import.
The investment cash flow・The investment from outside Japan ofJapanese assets causes demand in the Yen.If there is demand, the price rises andthese assets get together, the Yen becomesstrong by Sara.・The investment from a Japanese investoroutside Japan establishes supply and afactor weakening in this way for the Yen.When there are few demands than we buythese assets, the price of the Yen fallsdown and the Yen becomes strong.
Japans trade and investmentExplain what is happing in Japan.Two points:・the trade cash flow・the investment cash flow.
The trade cash flow・Japan has a trade surplus and theexporting more than importing.・The strengthening currency could lowerexports and increase imports if we run inthe long time.
The investment cash flow・It seems to be the strong request from anon-Japanese investor for Japanese assets.・The demand in search of assets outsideJapan was not so surely strong recently.But, we need to think about the methodthat the stock markets in the worldtreated to a little for last six months.