Int Finance Essay

3720 words - 15 pages

Nottingham University Business School

MBA (Finance) Programme

N1DM28 International Finance

Discussion and analysis of the movement in the value of US dollar against the Japanese Yen from 2002 to 2011

Kala Premarani Perumal

Student ID: UNIMKL 010085

COPY 1
Executive Summary

This paper is undertaken to discuss and analyse the exchange rate movements in the value of US dollar (USD) against the Japanese Yen (JPY) from 2002 to 2011. We could evaluate based on the exchange rates, that as an overall the JPY has appreciated against USD during this phase. The JPY had appreciated by 57% over these years (average 2002: ¥125.31/$ to average 2011: ¥79.72/$). The paper identifies the ...view middle of the document...

Introduction

The JPY is the third most traded currency in the world, predominantly used for trade related payment and its international presence is ranked after the USD and Euro (NISM, 2011). JPY moves freely against all main currencies, however the Bank of Japan (BOJ) being the central bank occasionally intervenes in the foreign exchange market to keep the exchange rate constant with official policy to stabilize the currency (EIU, 2002). The intervention by BOJ is expected when JPY rises above ¥90 per USD (The Economist, 2008).

Figure 1: Unit JPY per USD Jan 2002 – Dec 2011

Source: International Monetary Fund (IMF), 2012

In the graph above, the JPY/USD monthly movement is shown from 2002 to 2011. The JPY had fluctuated between JPY132.66/USD (on Jan 2002) and JPY77.81/USD (on Dec 2011). Overall the yen appreciation trend of 70.5% was observed between these periods.

This paper explores the in-depth dynamics of JPY’s sturdy and remarkable appreciation against the USD. Figure 1 trend can be divided into 3 periods, characterized by the following given changes in the month-average exchange rates against the dollar:

1. January 2002 – January 2005: Appreciation (JPY132.66/USD - JPY103.21/USD)
2. February 2005 – June 2007: Depreciation (JPY104.88/USD - JPY122.62/USD)
3. July 2007 – December 2011: Appreciation (JPY121.59/USD - JPY77.81/USD)

2. Period 1 - January 2002 – January 2005

a) Economic Climate

Japanese economy started expanding again in 2002 after overcoming the negative impacts from great depression (The Economist, 2006). In 2003 the economic growth shown on Figure 2 of 1.41% gives an indication that Japan is on its way to accelerate the economy.

Figure 2: Gross Domestic Product (GDP) Growth Rate 2000 - 2004
GDP Growth rate | 2000 | 2001 | 2002 | 2003 | 2004 |
% | 2.86 | 0.18 | 0.26 | 1.41 | 2.74 |
Source: Google Public Data, 2012

The growth was driven by increase in investment and exports due to increased confidence of its economic conditions (Dipendra, 2007). Signs of the recovery also sustained the JPY’s strength against the USD.

b) Current Account Balance

Current account balance comprises of all the export and import of goods and services of a nation (Eun et al,2008). Figure 3 shows that Japan had maintained a strong current account balance in these periods and trade balance up to 2011 driven by export sector in the country. Based on economic fundamentals, the strength of current account gives rise to currency appreciation given that foreign importers demand for JPY to settle their payments to Japanese manufacturers.

Figure 3: Japan: Trade Balance and Current Account in billion USD

Source: JETRO – Trade Balance & World Economic Outlook – Current Account, 2012

However, in actual from 2002 to 2004 the JPY appreciated from JPY125.31 (average 2002) to JPY108.19 (average 2004) up by 15.8%, but the current account balance during the same period rose (not fall) from...

Other assignments on Int Finance

Finance Essay

3188 words - 13 pages ------------------------------------------------- MINI CASE – Assume that you have just been hired as a business manager of PizzaPalace, a regional pizza restaurant chain. The company’s EBIT was $50 million last year and is not expected to grow. The firm is currently financed completely with equity, and it has 10 million shares outstanding. When you took your corporate finance course, your instructor stated that

Mgt216 Essay

714 words - 3 pages The first ethical issue presented in the ethics game simulation was whether to warn consumers about the contaminated product and what information to provide consumers about the contaminant. The second ethical issue was whether to sell a product that does not meet U.S. safety requirements in a foreign market that has lower safety restrictions. G-BioSport was not required to meet prior approval from the Federal Drug Administration before they

Economy Effect Of Marijuana

277 words - 2 pages Modern American History by Alan Renga 2nd Mid Term! You will be given 3 Short Essay questions and 20 Multiple Choice questions deriving from this list! 80 points total! The 1920s Warren Harding then Calvin Coolidge Tea Pot Dome 1st Red Scare Immigration Restriction, Sacco and Vanzetti Langston Hughes, Marcus Garvey, KKK Prosperity, advertising Prohibition, Al Capone Flappers, Clara Bow, Rudolph Valentino Babe Ruth, Jack Dempsey

The Vc Shakeout

2033 words - 9 pages ECONOMY 26 Luring a big firm to town is not the secret to job growth DEFEND YOUR RESEARCH 30 Are morning people wired for success? VISION STATEMENT 32 The social web’s east-west divide COLUMN 38 Warren Bennis looks back on his surprising path to fame New Thinking, Research in Progress hbr.org New Thinking, Research in Progress hbr.org FIRST The VC Shakeout Venture capital hasn’t worked for a decade and must be radically

Hospitals Paper

6014 words - 25 pages I hope to provide in this paper a comprehensive understanding for what the term “hospital” has become. Hospitals are an extremely complex system that man has created and shaped and reshaped throughout history. My goal in writing and researching this paper will be to provide those who read it a clear understanding on how the hospital system got to where it is today, and to shed some light on the many organizations that affiliate with and

Course Syllabus

2610 words - 11 pages [pic] COURSE SYLLABUS Semester: Fall, Year: 2012  College Mission Statement Richard J. Daley College provides high-quality education which leads to academic success, career development, and personal enrichment that fulfill diverse community needs. Mathematics Department Mission Statement Our mission is to deliver excellent service and to provide learning opportunities by offering a wide range of mathematics courses, which will help our

Management

1477 words - 6 pages Boeing Management Planning Heather Oetzel MGT 330 October 22, 2012 Joe Cheng Abstract Boeing is known as “the world’s leading aerospace company and the largest manufacturer of commercial jetliner and military aircraft combined ("The Boeing Company: About Us", 2012). Every company uses different types of management techniques including how the planning function of management is used. Planning allows organizations to develop how the

Assisted Suicide

1015 words - 5 pages Should physician-assisted suicide be legal? While I believe if one chooses to end his or own life through physician assistance for reasons that they chose, the choice should be up to the individual. Physician-assisted suicide should be at one's discretion. “Assisted Suicide, also called Voluntary Euthanasia, is currently a contentious issue in many countries. Because Euthanasia is legal in a few modern democracies: the Netherlands, Belgium

Tanglewood Case 1

797 words - 4 pages Tanglewood’s staffing strategy requires the organization to make key decisions about the acquisition, deployment, and retention of the organization’s workforce. In order to accomplish this, Tanglewood’s must make thirteen decisions regarding its staffing levels and its staffing quality. One of the first decisions that Tanglewood needs to choose is to acquire or develop talent. Tanglewood should try to develop their current talent because one

Nnnnn

1391 words - 6 pages Есе по въпроса: Кои от всички „действащи” лица могат да се разглеждат като морално отговорни и в какво именно? по казуса Форд „Пинто” Корпоративните злодеяния са нанесли повече вреди на обществото от всички улични престъпления взети заедно. Според данни на ФБР сумата от уличните престъпления възлиза на $3.8 млрд. годишно, а загубите от корпоративните измами между $100 млрд. и $400 млрд. годишно

The Penis

1052 words - 5 pages The short story ”The Penis” is written by Hanif Kureishi. The short story is about a penis, which has been separated from its owner Doug, who we hear from later on. At first though we hear about a guy called Alfie who was “a cutter – a hairdresser – and had to get to work”. He is having breakfast with his wife, when she asks him what he did last night, and if he had a good time last night? Alfie can not remember what he did last night, he then

Similar Documents

Information Techonogy Essay

1570 words - 7 pages () ). Putting any rsmd.XXXX commands after the "while" loop at // the bottom throws a nasty exception. A bug on the SQLite side I // think. columnNames = new String[rsmd.getColumnCount()]; for (int i = 1; i <= rsmd.getColumnCount(); i++) { columnNames[i - 1] = rsmd.getColumnName(i

Financial Management Essay

4853 words - 20 pages - Inventories = 1.4× $270,000 3-8 TIE = EBIT/INT, so find EBIT and INT. Interest = $500,000 × 0.1 = $50,000. Net income = $2,000,000 × 0.05 = $100,000. Pre-tax income = $100,000/(1 - T) = $100,000/0.7 = $142,857. EBIT = $142,857 + $50,000 = $192,857. TIE = $192,857/$50,000 = 3.86×. Answers and Solutions: 3 - 8 Harcourt, Inc. items and derived items copyright © 2002 by Harcourt, Inc. 3-9 ROE = Profit margin × TA turnover × Equity

Working Capital Management And The Financing Decision

6464 words - 26 pages much short-term or long-term financing is available at | | |all times. Even if this were known, it would be difficult to change the financing mix on a continual basis. | | | | |6-6. |By using long-term financing to finance part of temporary current assts, a firm may

Mcdonald's Financial Analysis

5685 words - 23 pages : Condensed Approach | | | | | | | | | | | income statement | 2012-12 | 2011-12 | 2010-12 | 2009-12 | 2008-12 | sales | 27567 | 27006 | 24075 | 22745 | 23522 | net income | 5465 | 5503 | 4946 | 4551 | 4313 | + nt int ex aftr tx | 517 | 493 | 451 | 473 | 523 | equals NOPAT | 5982 | 5996 | 5397 | 5024 | 4836 | net interest expense after tax | 517 | 493 | 451 | 473 | 523 | taxes | 2614 | 2509 | 2054 | 1936 | 1845