Week11

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Week11

  1. 1. ➢ Why is the Japanese Yen so strong? What is its implications for an export- driven economy like Japan?
  2. 2. ➢ Outline ・Introduction ・Historic Trends ・Causation ・Suffers ・Problems ・Countermeasure ・Summary ・References
  3. 3. ➢ Introduction ・The Yen is getting stronger against the Dollar in the overall trend during the last 20 years. ・In an historic perspective, the strengthening of the Yen had been predicted. ・The worlds foreign currency exchanges has been a concern for the strength of the Yen.
  4. 4. ➢ Historic Trends ・In 1993 - 1996 time-frame, the Yen was relatively very strong. ・In 2010, the Yen reached a 15-year high against the Dollar. ・A strengthening of the Yen fits the historic per- spective of both the last 20 years and the last 3 years.
  5. 5. ➢ Causation ・If there is relatively more supply and less demand for Yen, the Yen will weaken. ・If there is more demand and less supply of Yen, the Yen will strengthen. - A strengthening of the Yen means an increasing demand for Yen compared to relatively less sup- ply. ・The strength of a currency will hinge on trade and current accounts.
  6. 6. ➢ Suffers ・The Japanese trade surplus. ・Thelow return on investments in the rest of the world. ・The expected monetary policy in the U.S. ・Thediversification of foreign reserves in other countries away from the U.S. Dollar and Euro.
  7. 7. ➢ Problems ・Bystrengthening of the Yen, the stock world markets performance is poor. ・Bythe deflation in Japan, consumers purchasing power has increased. ・The domestic interest rates in Japan are not very attractive to park your money.
  8. 8. ➢ Countermeasure ・To taking advantage of inexpensive labor costs and lower taxes, industrial production is shifting overseas. ・The Bank of Japan stands ready to enact mone- tary policy for the possible effects of a prolonged period of yen strength in the Japanese economy.
  9. 9. ➢ Summary ・By Yen is a currency with net inflows, the strengthening of the Yen causes. ・A strengthening of the Yen is only having a very negative effect in Japan. ・In overseas markets, the price competitiveness is lose.
  10. 10. ➢ References ・Why is the Japanese Yen so Strong http://www.stocktrendinvesting.com/blog/why-japanese-yen-so-strong ・ImplicationsOf Strong Yen On World Wide For- eign Exchange Market http://www.prweb.com/releases/2011/10/prweb8899591.htm ・Why is the Value of the Japanese Yen so Strong? Interest Rates and the Carry Trade http://www.reedconstructiondata.com/alex-carrick/post/why-is-the-value-of

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