# 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?

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/\$

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