The document discusses the strong Japanese yen and its implications for Japan's export-driven economy. It reports that the yen is strengthening due to Japan's trade surplus and low returns on foreign investments. A strong yen means the currency is widely used internationally and held as a reserve. While a strong yen benefits Japanese consumers, it hurts exporters by making Japanese goods more expensive overseas and thus less competitive. The document outlines the history of yen fluctuations and concludes the current strength reflects typical economic factors for Japan.

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?
s1180155 Tishiki Hiraide

2. Outline
• About Japanese yen
• The reason of Japanese surplus
• Yen and Dollar history and trends
• What does strong Yen mean?
• Suffers
• Case of Currency Impact
• Conclusion

3. About Japanese yen
• The Japanese is the official currency of
Japan.
• The third most traded currency in the foreign
exchange market after the United States
dollar and the euro.
• The cause for the strengthening of the Yen is
that the Yen is a currency with net inflows.

4. The reason of Japanese
surplus
• The reason for this is the combination of the
strengthening trend itself, the Japanese trade
surplus, 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.

5. Yen and Dollar history
and trends
• The overall trend during the last 20 years in
clear. The Yen become stronger against the
Dollar.
• The Yen / Dollar exchange rate has a
fluctuating pattern with continuous lower
tops.
In 1993 - 1996 time-frame, the Yen was relatively very
strong.・In 2010, the Yen reached a 15-year high
against the Dollar.

6. 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.

7. Suffers
• The Japanese trade surplus.
• The low return on investments in the rest of
the world.
• The expected monetary policy in the U.S.
• The diversification of foreign reserves in other
countries away from the U.S. Dollar and
Euro.

8. Case of Currency Impact
• The initial reaction in the currency markets
was a strengthening in the value of the yen
versus the U.S. Dollar in the earthquake on
March 11.
• Thus, Japanese investors would pull their
money out of other countries and put it
back in Japan. And that’s exactly what did
happen.

9. Conclusion
• The cause for the strengthening of the yen is
that the yen is a currency with net inflows.
• Yen are bought then that there are yen sold
more.
• The reason for this is the combination of the
strengthening trend itself, the Japanese
trade surplus, the low return on investments
in the rest of the world.

10. References
• en.wikipedia.org/wiki/Japanese_yen
• http://www.stocktrendinvesting.com/blog/%20why-
japanese-yen-so-strong
• http://www.stocktrendinvesting.com/blog/why-
japanese-yen-so-strong
• http://www.prweb.com/releases/2011/10/
prweb8899591.htm