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Forex
Markets: Japanese Yen vs US Dollar
The Japanese yen is the official currency
of Japan and after the euro and the US dollar is the most widely
traded form of currency on the Forex. The foreign exchange
market can trade currencies from all over the world with each
other. There are many individuals who trade on the Forex to
make a profit. When doing this, it is important to understand
how each form of currency works in relation to others. The
Japanese yen is very comparable to the US dollar on the Forex
market.
The Japanese yen was first recognized as currency in 1870
and was modeled after the monetary system in Europe. After
War World II, the Japanese yen lost most of its value due to
instability. Now, the yen has more value and compares more
consistently with the US dollar.
The
value of the Japanese yen is mostly determined in the foreign
exchange markets and by simple supply and demand. When
a yen holder wants to exchange that form of currency for other
currencies in order to purchase goods, services or assets,
the money is traded on the Forex. When the demand for the yen
is high, the value goes up. Until the Bretton Woods System
collapses in 1971, the value of the Japanese yen was set at
Y360 per US $1. Those prices helped stabilize the Japanese
economy. When that system was done away with, the value of
the yen compared to the US dollar became more competitive.
Up to that point in time, the yen was undervalued.
As time progressed, the Japanese government was concerned
that if the value of the yen rose, it would hurt the export
business in Japan. They thought it might make Japanese products
less competitive and would negatively affect the industry.
This is when the Japanese government often intervened with
the Forex to affect the value of the yen. This was not helping
and the value of the yen climbed steadily. When the increased
costs of oil began to change from 1974 to 1976, the yen began
to depreciate. There were several fluctuations of the yen during
the late seventies and early eighties as the price of oil increased.
The yen was weak compared the US dollar until the late eighties
when the value began to rise because of the trade surplus that
was taking place in Japan.
When the big push came to invest in overseas companies and
products, the yen began to have more value. Japan currently
enjoys incentives from overseas investments. With the large
rise in the value of the yen, Japanese companies began to search
for lower production costs and costs associated with importing
and exporting.
With the popularity of exchanging and trading the Japanese
yen to US dollars, the exchange rates on the Forex
are important. The exchange rates represents the link between on country and
their partners in other countries. The trading between countries
can either negatively or postively affect the relative price
of goods and services that are being traded at any one give
time. The exports and imports, the assets and the profit from
these trades all affect the currency rates. Japan is major
import and export country. The yen is widely used and recognized
on the foreign exchange market.
Over time, the fixed, or constant, rates can be predicted
by looking at a wide variety of factors including the government
policies of a country, current events, supply and demand and
even consumer attitudes. The Forex boasts flexible rates, which
means that the rates are always changing based on the trade
flows, interest rates, rates of inflation and the prediction
of future events.
It is also important to remember when comparing the Japanese
yen to the US dollars that the foreign exchange market is the
most liquid market in the world. It is not like the stock market.
Money is constanly changing hands from financial instiutions
to other institions. It takes an experienced broker or profeessional
that knows and understand the various currencies and trends
to understand to trade sucessfully on the Forex market. The
Japanese yen is more comparable to the US dollar now than it
was in the past. It is one of the major currencies that is
traded every single day on the foreign exchange market. # # # # # SolveYourProblem.com : 2007
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