1. Why is the Japanese Yen so strong?
What is the implications for an
export-driven economy like Japan
s1180246-Pham Van Thanh
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2. 1.Content
• Japanese Yen
• Yen/Dollar Historic Trends
• What does strong Yen mean?
• Suffer
• Trade Cash Flow
• Investment Cash Flow
• Conclusion
• References
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3. 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
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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
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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
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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
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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
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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
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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
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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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