The recent Japanese Yen break-out versus the US dollar represent a significant move for investors. It means that the Japanese economy will now look to emerge from the massive global economic crisis of the past few years.
Will it be able to deliver growth, which will lead to a surge in prices? On the other hand, the Japanese economy is facing tremendous problems, mainly due to the stagnation of the world’s third largest economy. Rising unemployment, deflation and huge debt levels threaten to completely destroy the Japanese economic system. But the Japanese are prepared for all these challenges.
Since the 1990s, the Japanese have made use of their strong currency to gain an advantage over other countries and their consumers. Unlike the US dollar, the Japanese Yen is freely traded in the Asian markets, and they are heavily involved in this trade. Thus, even the Japanese are now keenly aware of the fact that they should maintain a stable trading position in order to avoid drastic falls in the value of the Japanese Yen.
Now that the Japanese Yen has hit its best for a rebound against the US dollar, many analysts expect further gains for the country. It is easy to understand why these expectations have been rising up recently. This is because investors are once again making use of the purchasing power of the Japanese economy to invest in the stocks of companies like Apple and Microsoft.
Investors are not only taking advantage of the rise in share prices and the stock market in Japan; they are also anticipating higher profits in the future. Japan is now making use of the stronger Yen to boost the GDP of the country. More importantly, this is proving to be very beneficial for the ordinary citizen of Japan.
With the value of the US dollar falling by almost two thirds since the start of the year, the Japanese have taken full advantage of this trend. Even if the value of the Yen rises back to the level of the US dollar, the Japanese still stand to gain a lot from this economic slump. Of course, the Japanese government should also take its responsibility to make sure that the inflation problem does not return.
It seems that the Japanese will also be facing serious issues on the oil front. Earlier, the nation’s oil and gas production stood at just one third of the production of its neighboring countries. However, Japan is now doing all it can to sustain this oil and gas production and improve the efficiency of the nation’s infrastructure.
The Japanese government is also focusing more on exports and manufacturing sector. This should help in improving the prices of the Japanese products. Of course, the government should always ensure that a level of stability is maintained during these times of turmoil in the global markets.
In addition, the Japanese are using their currency to gain more ground in the Asian markets. They are also taking a close look at the United States’ fiscal policy. As a result, more direct investments in US financial institutions are likely to take place in the near future.
The Japanese are also reducing the number of citizens who visit US and spend money in this country. A lot of people have already left the country as a result of the weak state of the economy. More Japanese are also planning to emigrate to US.
As long as there is a steady and rising exchange rate between the Japanese Yen and the US dollar, more savings and future growth will come from this country. In addition, inflation is almost non-existent in the country. Also, many analysts believe that the strong yen will also increase its use in imports in the near future.
In conclusion, there is no doubt that the Japanese will continue to enjoy their newfound wealth. status until the global economy recovers, but the situation is likely to change drastically at some point.