Strong Yen and Its Impacts on Japanese

Strong Yen and its impacts on Japanese economy

Introduction/topic explanation:

USD exchange against Yen is $1 to ¥123 in 2007, and climb up to $1 to ¥76 in 2011. The Yen raise crazy during 4 years, and Japan’s strong Yen become a hot issue to not only the domestic economy, but also global economy environment. Strong Yen seems as a safe-haven asset to invest after the global economy crisis. Moreover, after the earthquake disaster, strong Yen become a heavy task to both Japanese after crisis recovery and domestic economy. In this paper, I will use facts and examples to illustrate the problems that the strong Yen bring to domestic economy. After that, I will explain why the Yen is so strong, and provide some possible solution. The strong Yen is the urgent problem that needs to be settling down as soon as possible in order to save Japan’s economic, and protect the financial organization function normally.

Identification of problems:

The strong Yen will trigger a series of problems, just like dominos effect. The first problem that the strong Yen will bring is the cost increase to the produce process, and makes the products in Japan less competitive than other competitors such as China and Korea. Yen appreciate; will reduce the sale and economic output. Japan is an exporting oriented industrialization, and it’s exporting business in very important to the domestic business. Once the Yen increase it makes the Japanese-made product too expensive to sell, and less affordable for foreigners. “According to research by the Osaka Chamber of Commerce, 73.3 percent of members engaged in export-related businesses are already experiencing negative influences of the strong Yen”. Moreover, Japan exports rate has felled 3.3 percent compare to the prior year, and the Finance Ministry report a trade deficit of 274 Million Yen on November. The strong Yen and earthquake is the main reason that drags on Japanese exports. Honda is one of exporter that considers decreasing its profit...