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One of the largest and most often traded currency in foreign exchange markets is
the Japanese Yen. The Japanese Yen is Japan’s official currency and was created in the late
1800’s. According to Silver (2019), Japan has the third largest global economy with its
GDP crossing over $5 trillion in 2019. Also, in 2019 Japan was responsible for $694
billion of exports and $632 billion in imports. According to Simoes (2019), Japan’s top
exports included cars totaling $101 billion, vehicle parts totaling $35 billion, integrated
circuit boards totaling $26.5 billion, machinery totaling $22 billion and printer equipment
totaling $13.6 billion. Japan has been recognized for its export efficiency and
competitiveness making it the world’s fourth largest export in terms of US Dollar. Each
consecutive year, the Japanese economy has seen steady export growth creating a trade
surplus since 1980. The great depression of 2008 and the natural disaster wreaked havoc
on the entire Japanese economy and weakened their economy taking several years to
recover. Since its recovery and demonstrated growth and newfound stability, the Yen has
been reserved by others around the globe at low rates, creating gateways for trading. It is
important for traders to understand Japan’s current economic standing including the
factors that influence the exchange rate.
Just like the commodity market, the foreign exchange rates are determined by supply
and demand. The influencing parties are labeled as businesses, central banks, individual
contributors, international institutions, investors and governments. As stated by Marthinsen
(2015) and Twin (2019), there are several influencing factors that affect the foreign
exchange rates and those are, central banks, domestic prices, expectations, government
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