Sunday, April 17, 2016

Japan gets little G-20 support for potential yen intervention

Jake Kazmierczak
http://www.japantimes.co.jp/news/2016/04/17/business/economy-business/japan-gets-little-g-20-support-potential-yen-intervention/#.VxQ-LDArKUk

Okay, I have chosen to write about this article not because I have any opinion on it at all, but because I do not understand it whatsoever. The article comes following the G-20 meeting in Washington this weekend and essentially describes what happened in regards to the strengthening of the Japanese Yen. Simply, my confusion can be understood through this quote by Hiromichi Shirakawa,“no one suffers from an appreciation of the yen except Japan,” huh? I do not understand how a stronger currency would be bad for the economy. The article suggest domestic demands are low and this is a major problem for Japan... Wouldn't a stronger yen be good in that sense? Apparently the question at hand was whether or not the G-20 would support Japan if they chose to forcefully devalue their currency, which the verdict ending up as nobody being in agreement to that. I am honestly quite confused, and plan to ask about this in GLS492, is the fact that demand is low in Japan causing the Yen to grow stronger because it forces businesses to sell for cheaper? If this is the case, this is a problem for business, but great for the average person. In regards to other countries and trade between them, this forces other businesses to lower their price to compete with Japanese products in Japan... This my be the real problem... Nonetheless, I have ditched my pride and will admit that I am quite confused. Looking forward to possibly understanding this at a later date. 

No comments: