back of new 1,000 yen banknote
When the value of yen is high (around 75 to 95 yen per dollar),
Japanese goods become more expensive overseas and less people buy them,
and foreign goods become cheaper in Japan and people buy these goods
instead of Japanese products. These forces bring the trade surplus down
and cause the value of the yen to decrease.
When the value of yen is low (around 105 to 140 yen per dollar),
Japanese goods become cheaper overseas and more people buy them. Also,
foreign goods become more expensive in Japan and more people buy
Japanese goods instead of foreign products. These forces increase the
trade surplus and cause the value of the yen to rise.
In the mid 1970s when the dollar was worth 240 yen, American tourists
could travel cheaply in Japan and Japanese products were cheap. In the
late 1980s and early 1990s when the dollar was worth 80 yen, the cost of
living for Americans in Japan was almost catastrophically high but
American companies were able to make inroads in the Japanese economy
because American products were cheap in Japan.
A strengthening of the yen affects not only trade with the United
States it also affects trade with other countries because many of these
transactions are done in dollars. Japan's trade surplus with the rest
of the world creates a demand for yen, needed to purchase goods in
Japan, which cause the value of he currency to rise.
Eisuke Sakakibara, a deputy finance minister, became known as Mr. Yen
because his bold pronouncements were enough to cause major movements in
the currency markets. He took his position in 1995 and immediately set
about making statements and taking action to lower the value of the yen
and help Japan's economy.http://factsanddetails.com/japan.php?itemid=1797&catid=24&subcatid=154
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