Question

What are the major forces that affected the Japanese yen over the years? What factors do you think are important to monitor as you try to forecast what will happen to the value of the yen in the future?

Answer 1

Answer:

A) Forces of Demand and Supply

B) Slow GDP growth

C) Level of Unemployment

D) Monetary Policies by Central Bank

Explanation:

A) Expressing the mean from the concept of laws of economics, the Yen, like the Dollar and Euro, is propelled by forces of demand and supply. The problems that effect demand and supply can directly or indirectly impact the rate of the Yen.

B) Gross Domestic Product (GDP) in economics measure or evaluate the net production and consumption of products and services within the country in a given year. It certainly gives sufficient information about the fitness of Japan’s economy and can seriously impact the Yen. That is, absence of growth usually spurs the currency to decline.

C) Level of unemployment is another crucial component that can affect the Yen. Virtually everyone who buys and sell in the different markets, especially in the foreign currency exchange, needs to the annual jobs statistical reports, which indicate the overall nature of the Japanese economy. A decrease in unemployment which is sufficiently more than forecasted by the market can have an effect on the currency resulting in currency appreciate. It important to note that in general, improvements in employment are seen as very positive within the market.

D) Monetary Policies by central bank. Most times the monetary policies of the government tend to weaken the currency. It’s for this reason that foreign currency market dealers anticipate signs on changes in monetary policy.