Homework SourseWhat type of exchange rate system exists in japan Has us ev
What type of exchange rate system exists in japan ? Has us ever changed over the years and if so, when and why?
What type of exchange rate system exists in japan ? Has us ever changed over the years and if so, when and why?
Solution
The Japanese economy had a fixed exchange rate system as per the Breton Woods agreement where 360 yen = 1 USD was fixed.
Yes, this has changed over the years as the value of yen was largely undervalued as per this agreement. In 1973 this was abandoned and Yen was allowed to free float and the value of Yen was 227 Yen = 1 USD. The Japanese government focuses on a very good export market and tries to maintain low yen value. Also, the Japanese central bank maintained near zero interest rate and is extremely anti-inflation. As of today 110 Yen = 1 USD.
