Influence on Japanese Economic Policies on the Yen

This study examines the influence of Japanese financial and economic policies on the value of the Japanese yen in international currency exchange. A variety of factors affects the exchange rate of a currency. There are four major types of market conditions that may be expected to affect foreign currency exchange rates under relevant conditions: changes in the value of exports and imports; differential rates of inflation; changes in domestic interest rates; and changes in foreign interest rates. The financial and economic policies adopted and followed by a country can affect each of these factors and, in turn, affect the value of its currency in international exchange (Yarbrough & Yarbrough, 2000).

If the value of a country's exports increases relative to the value of its imports, the value of the country's currency (other things being equal) tends to increase in the foreign currency exchange markets. Alternatively, if the value of imports increases relative to the value of exports, the value of the currency tends to decrease. Imports and exports determine a country's balance of trade, which in turn influences the country's balance of payments. When these projected patterns do not correctly describe a specific situation (such as a contrary scenario wherein there is a concurrent rise in a country's trade deficit and the val

. . .
ket, which resulted in the end of absolute government control of interest rates in Japan. Japanese banks and securities firms were given formal authority for a market-rate funding mechanism for their bond purchases through the use of short-term repurchase agreements. Two provisions of the Foreign Exchange Law of 1980 were important to the integrating of Japanese domestic money markets with international markets. These provisions of the law were the authorizations (a) for Japanese banks to borrow and lend foreign currencies freely (both at home and abroad), subject only to financial prudence guidelines, and (b) for Japanese corporate enterprises to finance themselves abroad through borrowing denominated in foreign currency. In the mid-1980s, reforms were introduced that gave Japanese banks increased access to international markets. Prior to this liberalization, the Bank of Japan provided all funds required by Japanese commercial banks. In return, however, the commercial banks were required to adhere to domestic lending policies prescribed by the Bank of Japan. Banking reform in Japan has not ended the structure of separation between banking and credit intermediaries. Financial liberalization policies in Japan have been bala
. . .

Some common words found in the essay are:
Exchange Rate, Pressure G-7, World Bank, Canner Kilian, Japanese Experience, Ministry Finance, Economy Japan, War Japanese, FDI Japan, Studies History, japanese economy, currency exchange, international currency, exchange rate, international currency exchange, central government, financial economic, financial economic policies, economic policies, value country's, crude oil, foreign exchange, value country's currency, currency exchange value, crude oil prices,
Approximate Word count = 4692
Approximate Pages = 19 (250 words per page)

More Essays on Influence on Japanese Economic Policies on the Yen