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Why is the Japanese Yen so
strong? What is its implications
for an export-driven economy like
Japan? Report on the current...
Japanese Yen so Strong
・The cause for the strengthening of the Yen is
that the Yen is a currency with net inflows.
・The co...
・The low return on investments in the rest of
the world.
・The expected monetary policy in the U.S. and
the diversification...
Yen / Dollar Historic Trends
・The Yen is getting stronger against the Dollar.
・The Yen / Dollar exchange rate has a
fluctu...
Currency Theory
・When there is relatively more supply and less
demand for Yen’s, the Yen will weaken.
・When there is more ...
The trade cash flow.
・ Exports from Japan cause demand for Yen to buy the
Japanese goods.
・Imports into Japan create suppl...
Trade Cash Flow
・Japan has a trade surplus and is exporting
more than importing.
・The strengthening currency could lower
e...
Investment Cash Flow
・ The demand for assets outside Japan has
definitely not been very strong recently.
・There is also th...
Demand for Japanese Assets
・This could come from foreign reserves
diversification.
・The Japanese interest rates have alway...
Reference
http://www.stocktrendinvesting.com/blog/why-
japanese-yen-so-strong
http://topics.bloomberg.com/japanese-yen/
ht...
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Why is the japanese yen so strong? what is its implications for an export driven economy like japan? report on the current status of the currency and what it means?

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Transcript of "Why is the japanese yen so strong? what is its implications for an export driven economy like japan? report on the current status of the currency and what it means?"

  1. 1. Why is the Japanese Yen so strong? What is its implications for an export-driven economy like Japan? Report on the current status of the currency and what it means? s1190116 Kazuhiro Tasaki
  2. 2. Japanese Yen so Strong ・The cause for the strengthening of the Yen is that the Yen is a currency with net inflows. ・The combination of the strengthening trend itself. ・The Japanese trade surplus.
  3. 3. ・The low return on investments in the rest of the world. ・The expected monetary policy in the U.S. and the diversification of foreign reserves in other countries away from the U.S. Dollar and Euro. ・In an historic perspective, the strengthening of the Yen is nothing new and not unexpected.
  4. 4. Yen / Dollar Historic Trends ・The Yen is getting stronger against the Dollar. ・The Yen / Dollar exchange rate has a fluctuating pattern with continuous lower tops
  5. 5. Currency Theory ・When there is relatively more supply and less demand for Yen’s, the Yen will weaken. ・When there is more demand and less supply of Yen’s, the Yen will strengthen. ・The strength of a currency is driven by trade and current accounts.
  6. 6. The trade cash flow. ・ Exports from Japan cause demand for Yen to buy the Japanese goods. ・Imports into Japan create supply of Yen to buy other currencies to pay for the imports. The investment cash flow ・Investments from outside Japan in Japanese assets cause demand for the Yen. ・Investments from Japanese investors outside Japan create supply and thus a weakening factor for the Yen.
  7. 7. Trade Cash Flow ・Japan has a trade surplus and is exporting more than importing. ・The strengthening currency could lower exports and increase imports in the long run. ・in the short term it reinforces itself by reducing the supply of Yen required for imports.
  8. 8. Investment Cash Flow ・ The demand for assets outside Japan has definitely not been very strong recently. ・There is also the fact that Japanese savers have preferred Japanese Government Bonds for decades, allowing the Yen to stay strong despite world record low levels.
  9. 9. Demand for Japanese Assets ・This could come from foreign reserves diversification. ・The Japanese interest rates have always been the lowest.
  10. 10. Reference http://www.stocktrendinvesting.com/blog/why- japanese-yen-so-strong http://topics.bloomberg.com/japanese-yen/ http://www.bbc.co.uk/news/business-22883873
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