Nov 2, 2017 in Business

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Japanese Yen

The strengthening of the Japanese Yen made the government of Japan frantic with it. They wonder what might make the yen strengthen. Rising inflation in Japan and their economic recovery after the earthquake and tsunami were the main presumptions they made. Economic analysts considered such consequences as the destruction of the economy. They mention Toyota as one of the most famous and large car manufacturers. For every 1 Yen appreciation against the dollar, the company loses 30 billion Yen in profits that are equal to $380 million. Thereby the yen's appreciation might close down factories and plants in the country

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It is not a secret that the global economic slowdown, particularly the Eurozone crisis, is the main reason for the external pressure experienced by the national economy. That is why the Japanese authorities are concerned with strengthening the Japanese Yen as far as it hinders export. As a result, Japanese products become more expensive for importers. The matter is that the economy of Japan is an export-oriented one and strengthening of the yen will make it ailing.

Conclusion

Therefore, the Japanese exporters have a good reason to worry about. As well as the yen has risen to a 15-year high against the dollar, the goods become much more expensive abroad. Usually, when a country, like Japan, for example, becomes a big and significant exporter, it constantly builds up large trade surpluses. That is why companies earn even more money outside the country than foreign companies earn in Japan. The flow of money, the Japanese exporters convert into their national currency, pushes the value of the yen up. "Foreign exchange rates should reflect the real economy and fluctuateе within the range of common sеnse. Otherwise, it will distort the rеal economy," Azumi explains. That is why the government has to be ready to intervene. The Central Bank has nothing to do but to try and weaken the yen because it turns into a real battle between the government and the market. 

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