Major Forces That Affected the Japanese Yen

Prior to the global economic recess, the Japanese yen was affected by several factors that accelerated the effect of the economic meltdown on its economy. This basically was caused by the tragic fall in external demand for Japanese products. The fall in demand is estimated to have gone down to a tragic 11.8 percent in demand compared to the United States, which recorded a fall of up to 0.15 percent in the same period. In the last quarter of the year 2008, the United States recorded a 19.6 percent decrease in imports. This translates to a great fall in exports in Japan due to low demand for Japanese products. This caused a major setback in the Japanese economy, but it was even harder with the global economic meltdown effects.

The shift in consumer demand from high-end goods to purchases of low-priced items further disabled the Japanese economy. Japan concentrates mostly on the production of high-end products. The consumers’ shift on purchases of these items then created a low demand for the items. This resulted in a vulnerable economic environment, a factor that worsened the country’s economic response to the global economic meltdown. The decrease in exports from Japan to the United States has had the greatest impact on the Japanese yen. The global recess also has had its share in influencing the rising and falling fluctuations on the Japanese yen. With the current instability of the Japanese yen, characterized by the fall in global demand on the countries’ products, the future of the yen is not really secure in terms of value. The yen, if the trend goes on, will lose its value and will not be in a position to compete in the global currency market.

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