Economy, Job, And Trade Deficit

1271 WordsAug 4, 20156 Pages
There are many countries in the world that are known for currency manipulation in order to benefit from trade agreement and economic prosperity. Japan is the second largest currency manipulator in the world, while China is the leader in currency manipulation. Japan is responsible for growing U.S. trade deficit and numerous job losses in the United States. If Japan and other countries could eliminate currency manipulation, it would reduce U.S. trade deficit by $200 billion to $500 billion every year, and increase U.S. GDP by $288 billion to $720 billion. The elimination of currency manipulation would also create between 2.3 million and 5.8 million job in the U.S. The research paper evaluates the impact of currency manipulation by Japan…show more content…
Currency manipulation is a strategic protectionist and world 's worst economic policy that countries utilize, where U.S. Government, International Monetary Fund (IMF) and the World Trade Organization (WTO) have very little authority. In the past decade, China has heavily engaged in currency manipulation at a rate of $1 trillion, however, 20 other countries are also involved in such practices. Japan has devalued the yen through large purchases of foreign assets in the last two years. The Bank of Japan purchases and holds foreign exchange reserves, and Japan 's Government Pension Investment Fund (GPIF) are crucial element of Japan 's currency policy. Japan has been involved in currency manipulation from the early 2000. From 2000 to 2014, Japan 's holdings of foreign exchange reserves increased from $347 billion to $1208 billion, a quadrupled gain of $861 billion. The holdings of foreign assets in Japan 's GPIF also increased to $308.8 billion in 2013, and project to increase to $480 billion in the future (Bergsten 2014). Japan 's trade balance and current account remain suppressed in 2013 due to several factors, such as earthquake and tsunami, which increased demand for imports in anticipation of value-added tax increases that took effect in 2015. This also led to short-run impact of the fall of yen, which increased cost of Japan 's imports. In the upcoming years, the devaluation of yen is expected
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