![]() ![]() Since 1991, its net external assets (i.e., external assets minus external liabilities) have been in surplus, and represent the largest amount of external assets owned in the world. Japan holds more external assets than external liabilities. Japan's balance sheet includes all the foreign assets and liabilities that Japanese people own, including Facebook shares owned by Japanese people (assets), bonds issued by Toyota to raise money (liabilities), Australian dollars owned by Japanese people (assets), loans to Honda from American banks (liabilities), Japanese government bonds owned by the Chinese government (liabilities), shares of foreign companies owned by Softbank (assets), etc. owes an external liability that is listed on the liability side of the U.S. In this case, Japan owns an external asset that is listed on the asset side of Japan’s balance sheet, whereas the U.S. government, in return, has an obligation to provide cash to the bond holder when such a request is made. government that she wants it to be converted to cash. government, she can make a claim to the U.S. For example, if a Japanese citizen holds a government bond issued by the U.S. The balance sheet of an economy is a tabulation of the “external assets” and “external liabilities” of the citizens belonging to that economy. The question of how exchange rate fluctuations affect the assets and liabilities owned by the Japanese economy as a whole, i.e., the overall balance sheet of the Japanese economy, is not often discussed. That is what is known as the “balance sheet effect” (formally known as the "valuation effect") of exchange rate fluctuations. However, when it comes to the discussion of the impacts of exchange rate movements, there is one thing that is somehow not often mentioned in the media. In short, it is not easy to determine which market rate is better for the economy. The impact varies from industry to industry or from company to company, and depends on whether we are talking about the effects on consumers, workers, or investors, and so on. The effects of currency fluctuations are not so black and white. The short answer is, they are both correct. Is a weak yen good or bad for the economy? ![]() In particular, Japan relies on imports for most of its food and energy from overseas, so a weak yen causes higher inflation, which in turn lowers corporate and individual consumption and worsens the economy as a whole. Furthermore, it has been argued that a weak yen exacerbates inflation because it raises the prices of imported goods. A weak yen raises the prices of these products from overseas, which in turn hurts the companies' profits. In fact, it is bad for the economy, because Japanese firms, especially the large multinational firms, produce products (e.g., parts and unfinished products) in production bases overseas such as China and other East Asian countries and export the products to Japan. However, this time, people argue that a weak yen is not necessarily good for the Japanese economy. Traditionally, it had been argued that a weak yen is good and that a strong yen is bad for the Japanese economy, because a weak yen lowers the prices of Japanese products in the global market and increases sales and profits for exporting companies. The rapid depreciation of the yen and its volatile fluctuations to the current extent have been at levels unseen for a long while. It has since weakened, at one point approaching 139 yen to the dollar, and is hovering around 133 yen as of August 2022. It had had been hovering around 115 yen to the dollar from around October of last year until mid-March of this year. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.The Japanese yen has been depreciating fast and significantly against the dollar. compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. We may also receive compensation if you click on certain links posted on our site. We may receive compensation from our partners for placement of their products or services. ![]() ![]() While we are independent, the offers that appear on this site are from companies from which receives compensation. All international money transfer servicesį is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. ![]()
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