Exchange Rate and Balance of Payments

1.We chose Japanese Yen as are benchmark diversify rate because Japan is part of the G-10 Countries with U.S. and oneness of the study economies in the world. Japan is also a Key U.S. Business assistant in importing and exporting goods and services. Through our findings we have veritable our insight of the Japanese Yen being very erratic to the dollar. In the graph shown below, we croup conclude that from 1995 till 1999 the Japanese yen was weaker against Dollar. The process has been repeated between the years 2001-03 and 2006-recent. 2.remainder of modern Account shows one countrys export and Import in Goods and services. In the U.S. case since 1995 the Balance of Current Accounts has been constantly growing deficit as shown in the graphical record Below. 3.The relationship between the Balance of the Current Account and the re-sentencing rate is that they coincide with each other. When an Exchange rate of one nations currency decreases against the other, the exports of that country give append and Imports decrease and Vise versa. For Example if the Dollar Depreciate against major world currencies then the U.S. Exports will then Increase and Imports will Decrease, leading to a Current Account Surplus. 4.What we found from the basic two findings state is the U.S.

Overall Current Account shortfall does not match the U.S.-JAP X-Rate. Since 1995 the shortage has increased constantly besides the Japan X-rate has been up and down, and doesnt match with the relationship explained in part three. If we compare the Current Account Deficit with save Japan adjacent to the X-Rate, we can conclude the findings match with our invoice in part three. In the Graph below we can see that between years 1995-99 Dollar was continuously change magnitude against the Yen which led to an increase in the Current accounts Deficit during that period with Japan. During the period of 2001-2003, the U.S. went through a recession. The deficit change magnitude because of less consumption of imports and a weaker... If you want to get a full essay, order it on our website: Orderessay

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