Japan Yen

4326 Words Mar 22nd, 2015 18 Pages
The Rise (and Fall) of the Japanese Yen
Lawrence Cifarelli III, Nazanin Ershad, Natthima Sonsoem, Anyesha Mahaptra
University of New Haven

Abstract
This Case study provides an insight to the fluctuations experienced in the currency of Japan, Yen from the late 1990’s to recent years. Japan follows the floating currency monetary policy due to which there is no measures taken on to control the fluctuations. Japan experienced magnificent growth through the 60's, 70's, and 80's leading into the 90's beginning. In the late 1990's, Japan’s economy marked its growth significantly slower, which had then come to be known as the 'lost decade' due to Japanese Asset Price bubble that collapsed. Eventually the nation faced major issues regarding
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For the following issues the Bank of Japan (BoJ) responded by embarking on Quantitative Easing (QE) in the early 2000's which did little to quell the deflation and Yen Strength that had plagued the nation entirely.
The major problem for the export-heavy nation became the strength of the Yen. When the exporters saw a more expensive Yen, they faced more difficulty to compete with domestic manufacturers in other nations. Also, due to extremely low rates of interest in Japan, it experienced massive outflows of capital from retirees and investors looking for yield in other economies such as United States, Europe and Australia.
Subsequently, the Japanese economy maintained a long-lasting recovery beginning in early 2002. However, the path has not always been smooth, given two "soft patches" (temporary softening in the market) and weakness in some parts of the economy.
Japan commenced on a multi-pronged approach by June 2012 in an urge to end the multi-decade slide that was seen in growth numbers for its economy. This approach was initiated by Shinzo Abe during his campaign for Prime Minister, once installed as the political leader of Japan’s economy with Hiroki Kuroda installed as the head of the Bank of Japan, the country spurred into putting effort in order to inculcate inflation consequently inflation back to the nation.
The current Japanese bond market bubble has contributed greatly to the fluctuation of the…

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