The Japanese yen to US dollar exchange rate has been rising lately. This is due to the fact that the Yen has been strengthening against the dollar カヴァン・ チョクシ. This article will examine why the Yen has been strengthening and how much it has appreciated.
What is the Japanese Yen?
The Japanese yen is the currency for Japan. The currency code for the Japanese Yen or JPY is listed as JPY. The Japanese government has pegged the Yen’s value to the US dollar at about 80 – 90 yen to 1 dollar to fight deflation.
Why Has The Yen Been Strengthening?
There are a number of reasons why the Yen has been strengthening against the US dollar. Some of these include:
1) Japan’s Economy is Doing Well.
Japan has double-digit growth for real GDP in Q4 2010, an unemployment rate lower than in most other G7 countries, and a current account surplus. These factors make people want to invest money in Japan because they are profitable there.
2) Japanese Government Monetary Policy Is Stimulative.
From 2001 to 2006, Japan’s interest rates were pegged at zero percent. This made borrowing money very cheaply and encouraged people to borrow more than usual. In addition, the availability of credit was also increased by other banking programs that greatly expanded the amount of credit in the financial system. All of these factors were also able to contribute to the strengthening of the Yen.
3) The US Dollar Is Weakening.
One reason why the Japanese Yen has been strengthening against currencies that are pegged to it is that, when compared with other major currencies, it is weakening at a faster rate than most other major currencies.
How Much Has The Yen Strengthened?
The Yen had strengthened against the dollar by 60% since October 2007, trading at around 100 yen per dollar. Compared with most other major currencies, the Japanese Yen is strengthening much more than most of these currencies and is weakening less than others.
What Causes Exchange Rates to Change?
Exchange rates are caused by events that cause demand to move. When the supply is constant but demand changes, so will the exchange rate. Events that can affect whether someone wants to buy one currency include political issues, economic factors, and speculation. Another factor is interest rates which can cause currency demand to change if the gap between different interest rates is significant.
What Does This Mean for Businesses?
Businesses should be aware that a strong yen could mean fewer sales from Japanese customers. Thus, they may have to reduce prices to attempt to compensate for the Yen’s strengthening against other currencies. Businesses should also consider importing products from Japan instead of exporting their products there because it will become less expensive. Also, they can purchase products from Japan to sell at their stores in the US.
Conclusion
The Japanese yen to US dollar exchange rate is on the rise. This is due to the fact that the Yen has been strengthening against the dollar. This could mean good news for businesses that import goods from Japan, as it will become cheaper.