Week11

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Week11

  1. 1. Why is the Japanese Yen so strong? What is the implications for an export-driven economy like Japan s1190223 Kentaro Takakura
  2. 2. 1.Content • Japanese Yen • Yen/Dollar Historic Trends • What does strong Yen mean? • Suffer • Trade Cash Flow • Investment Cash Flow • Conclusion • References
  3. 3. 2. Japanese Yen 2. Japanese Yen• Japanese Yen is the official currency of Japan• Third most traded currency after Dollar and Euro• Officially adopted by Meiji government on May 10, 1871
  4. 4. 3. Yen/Dollar historic trends • From 1949 to 1971, the value of the yen is fixed at 360 yen per 1 dollar • The Yen is more stronger against Dollar during the last 20 year • Now in 2012 the Yen/Dollar exchange rate is 90 Yen per 1 dollar
  5. 5. 3. What does strong Yen mean? • A official currency is called “strong” if: – It is used widely in foreign exchange market – Also used as a reserve currency • The Japanese Yen is the third most traded currency and the fourth most used as a reserve currency=>Japanese Yen is an strong currency
  6. 6. 6. Suffer • The strong Yen might harming to economy – The Japan trade surplus – Reduce the value of export whereas Japan is one of the most biggest export country – The low return on investment
  7. 7. 7. Trade Cash Flow • The export is more than import, so it cause the Yen strong • The Yen strong might reduce export and increase import in the long term • In the short term, it strengthening itself
  8. 8. 8. Investment Cash Flow • There is a strong demand from foreign investors for Japanese assets from China • The demand assets from outside Japanese is seem to be not very strong recently
  9. 9. 9. Conclusion • The reason of the strong Yen is that Yen is a currency with net inflows• It cause by the combination of strengthening itself, the Japan trade surplus, the low return investments… • The strong Yen is nothing new and unexpected
  10. 10. 10.References •http://en.wikipedia.org/wiki/Japanese_yen •http://www.stocktrendinvesting. com/blog/wh y-japanese-yen-so-strong •http://www.nytimes. com/2012/08/02/world/ asia/strong-yen-is- reinforced-by-japans- generation-gap.html? pagewanted=all&_r=0

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