Homework Help Question & Answers

The exchange rate between Japan and the US is JPN1.385/$. If there is increased political uncertainty...

The exchange rate between Japan and the US is JPN1.385/$. If there is increased political uncertainty in Japan, how does this affect the exchange rate between Japan and the US?

0 0
Add a comment
Answer #1

If political uncertainity increases in Japan, investors will start selling Japanese stocks and taking their investment outside Japan which will mean excess supply of yen leading to lower yen exchange rate. Also, people will start to flock to safe havens such as US and in currencies USD leading to higher demand of USD which again will put pressure on yen. So, Japanese yen will depreciate making the exchange rate to be more yens per dollar or for example 1.5JPN/$

Add a comment
Know the answer?
Add Answer to:
The exchange rate between Japan and the US is JPN1.385/$. If there is increased political uncertainty...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coin

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • 1. Suppose that PPP holds between Japan (the home country) and the US (the foreign, starred count...

    1. Suppose that PPP holds between Japan (the home country) and the US (the foreign, starred country), so that in logs: se+pi-P-0 Also suppose that UIP holds. Money demand in Japan is given by: and in the US by (a) Derive the fundamental equation of the monetary model of the (log) exchange rate. (b) Suppose that the relative money supply in logs is given by m -m, and that = 0.5 + 0.82t-1 + Eg, tencie with mean zero. Solve...

  • Assume that Japan and the US are trading partners. a..Draw a model showing the foreign exchange...

    Assume that Japan and the US are trading partners. a..Draw a model showing the foreign exchange for the US dollar(compared with the yen) b. Draw another model showing the foreign exchange rate for the yen(compared to the US dollar) c. Now assume that the US federal reserve institutes a policy that raises interest rates in the United States relative to interest rates in Japan. Is this a fiscal or monetary policy? d. Show what happens on both models - based...

  • Problem 2.(35 points) Suppose that the current Japan/US exchange rate is Eyys - 120, while the...

    Problem 2.(35 points) Suppose that the current Japan/US exchange rate is Eyys - 120, while the current Japan/Euro exchange rate is Eyje = 130 and the Euro/US exchange rate is Ee/s-0.7. Suppose your bank can exchange dollars, yen and euros freely and without extra charge at the current exchange rate. Now consider the following scheme. 1. Suppose you take out $100 from your savings account and convert them into yen at the current exchange rate. How many yen would you...

  • Assume a fixed exchange rate between the U.S. and Country X. If there was an increased...

    Assume a fixed exchange rate between the U.S. and Country X. If there was an increased demand by Country X for US dollars, explain the action the US government would take to maintain the exchange rate. Assume Country X’s currency is the Xero.

  • Questions 3-5 correspond with the US Market for Foreign Exchange with Japan, where the price of...

    Questions 3-5 correspond with the US Market for Foreign Exchange with Japan, where the price of $ foreign exchange is dollars divided by yen (i.e.), and quantity is the quantity of yen. 3. In the U.S. market for foreign exchange with Japan, how is this market affected by an increase in exports (i.e. US exports to Japan)? a. increase in the demand for foreign exchange b. decrease in the demand for foreign exchange c. increase in the supply of foreign...

  • Assume that the exchange rate between the United States and Japan is equal to 0.0086 $/yen....

    Assume that the exchange rate between the United States and Japan is equal to 0.0086 $/yen. Pound of Tomatoes Pound of Carrots Pound of Cucumbers Pound of Green Beans Price in the United States $3.29 $3.50 $7.54 Price in Japan 382.72 yen 270.00 yen 876.74 yen $2.50 200.00 yen Round prices to two decimal places. In which of the markets below does purchasing power parity (PPP) hold? In the market of tomatoes. In the market of carrots. In the market...

  • 15. If the real exchange rate between the U.S. and Japan is 1, the nominal exchange...

    15. If the real exchange rate between the U.S. and Japan is 1, the nominal exchange rate is 100 yen per U.S. dollar and the price of copper in the U.S. is $2.50 per pound of copper, what is the price of copper in Japan? A. 400 yen per pound of copper B. 250 yen per pound of copper C. 100 yen per pound of copper D. 40 yen per pound of copper E. 25 yen per pound of copper...

  • for the case of US, EURO, Remnimbi, Sterling or Japan, explain the major factors behind exchange...

    for the case of US, EURO, Remnimbi, Sterling or Japan, explain the major factors behind exchange rate fluctuations over the past two years?

  • A. Problems (mandatory) 1. The inflation rate in the US is 6% and in Japan it...

    A. Problems (mandatory) 1. The inflation rate in the US is 6% and in Japan it is 11%. If you know that the spot exchange rate is 100 yen equals $1, what will the expected spot rate be in a year from now? If there is exactness in the inflation differential and the exchange rate differential? Use yen terms. That is, yen 100/1 dollar, or 100yen=$1.

  • The exchange rate between the US dollar and the Euro is $1 = .9 Euro. If...

    The exchange rate between the US dollar and the Euro is $1 = .9 Euro. If Italian shoes costs $100 in the U.S. and 92 Euros in Italy, does purchasing power parity hold in this case? If the exchange rate instead were $1 = .89 Euro, is the rate closer to that where parity holds or further away?

Free Homework App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.