the japanese yen
DESCRIPTION
The Japanese Yen. ¥. Micah Brock, Michael Derocher, Ryan Early, Annie McDonough & Matt Warchol. The Birth of the Yen. Yen created by Meiji Government in 1871 under the New Currency Act Adoption of: Western style of currency Silver standard Decimal accounting system. - PowerPoint PPT PresentationTRANSCRIPT
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The Japanese Yen
¥
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Micah Brock, Michael Derocher, Ryan Early, Annie McDonough &
Matt Warchol
![Page 3: The Japanese Yen](https://reader033.vdocuments.us/reader033/viewer/2022061500/56813e57550346895da849ed/html5/thumbnails/3.jpg)
The Birth of the Yen
• Yen created by Meiji Government in 1871 under the New Currency Act– Adoption of:
• Western style of currency
• Silver standard
• Decimal accounting system
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Adoption of Paper Money & the Gold Standard
• Coins Law of 1897– Stipulated that 0.75 grams of gold was equal to 1 yen– Gold-convertible bank notes (a.k.a. paper money)
also introduced by the Bank of Japan
![Page 5: The Japanese Yen](https://reader033.vdocuments.us/reader033/viewer/2022061500/56813e57550346895da849ed/html5/thumbnails/5.jpg)
Fundamental Changes
• In 1931, following the example of European countries, Japan stopped the export of gold and suspended the convertibility of its banknotes
• In 1942, the Bank of Japan law permanently ended the convertibility of its notes, marking a monumental shift from the gold standard to the managed currency system
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The Yen Today
• Japan remains on a managed currency system
• Floating exchange rates– Increased volatility in the market
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The Yen Today: The Dollar vs. The Yen
• While all other major world currencies have been appreciating against the dollar, the yen has been depreciating
• Depreciation attributable to reported monetary contractions for three straight quarters in the Japanese economy with no reported expansionary policies in future
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The Yen in the Future
• The Yen has faced serious pressure in the past few months due to a weak Japanese economy and cross-selling pressure from other currencies with higher yields
• However, net short positions on the yen are currently at an 11 month low
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Technical Analysis
Yen Depreciation
100.00
101.00
102.00
103.00
104.00
105.00
106.00
107.00
Date
Series1
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Technical Analysis
Yen Depreciation
100.00
101.00
102.00
103.00
104.00
105.00
106.00
107.00
Date
Series1
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Technical AnalysisUSD/JPY
99.00
100.00
101.00
102.00
103.00
104.00
105.00
106.00
107.00
108.00
Series1
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Fundamental Analysis
United StatesEconomic Growth 4.7%
Money Growth 4.9%
Inflation 2.3%
Interest Rates 1.26%
Trade Balance -$75.2B
(with Japan)
Japan2.6%
3.9%
-0.3%
0.1%
+$75.2B
![Page 13: The Japanese Yen](https://reader033.vdocuments.us/reader033/viewer/2022061500/56813e57550346895da849ed/html5/thumbnails/13.jpg)
Market Expectations
• Current USD/JPY exchange rate:
0.009483¥/$
• 12-month USD/JPY forward rate
0.009782¥/$
Our long-term recommendation:
Buy the dollar. Sell the yen, it is garbage.