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The Japanese Yen

The Japanese Yen. ¥. Micah Brock, Michael Derocher, Ryan Early, Annie McDonough & Matt Warchol. The Birth of the Yen. Yen created by Meiji Government in 1871 under the New Currency Act Adoption of: Western style of currency Silver standard Decimal accounting system.

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The Japanese Yen

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  1. The Japanese Yen ¥

  2. Micah Brock, Michael Derocher, Ryan Early, Annie McDonough & Matt Warchol

  3. The Birth of the Yen • Yen created by Meiji Government in 1871 under the New Currency Act • Adoption of: • Western style of currency • Silver standard • Decimal accounting system

  4. Adoption of Paper Money & the Gold Standard • Coins Law of 1897 • Stipulated that 0.75 grams of gold was equal to 1 yen • Gold-convertible bank notes (a.k.a. paper money) also introduced by the Bank of Japan

  5. Fundamental Changes • In 1931, following the example of European countries, Japan stopped the export of gold and suspended the convertibility of its banknotes • In 1942, the Bank of Japan law permanently ended the convertibility of its notes, marking a monumental shift from the gold standard to the managed currency system

  6. The Yen Today • Japan remains on a managed currency system • Floating exchange rates • Increased volatility in the market

  7. The Yen Today: The Dollar vs. The Yen • While all other major world currencies have been appreciating against the dollar, the yen has been depreciating • Depreciation attributable to reported monetary contractions for three straight quarters in the Japanese economy with no reported expansionary policies in future

  8. The Yen in the Future • The Yen has faced serious pressure in the past few months due to a weak Japanese economy and cross-selling pressure from other currencies with higher yields • However, net short positions on the yen are currently at an 11 month low

  9. Technical Analysis

  10. Technical Analysis

  11. Technical AnalysisUSD/JPY

  12. United States Economic Growth 4.7% Money Growth 4.9% Inflation 2.3% Interest Rates 1.26% Trade Balance -$75.2B (with Japan) Japan 2.6% 3.9% -0.3% 0.1% +$75.2B Fundamental Analysis

  13. Market Expectations • Current USD/JPY exchange rate: 0.009483¥/$ • 12-month USD/JPY forward rate 0.009782¥/$ Our long-term recommendation: Buy the dollar. Sell the yen, it is garbage.

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