Anatomy of Sudden Yen Appreciations
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Summary:
The yen is an important barometer for the Japanese economy. Depreciations are typically associated with favorable economic developments such as increased corporate profits, rising equity prices, and upward pressure on domestic consumer prices. On the other hand, large and sharp appreciations run the risk of lowering actual and expected inflation, squeezing corporate profits, generating a negative wealth effect through depressed equity prices, and reducing confidence in the Bank of Japan’s efforts to reflate the domestic economy and achieve the inflation target. This paper takes a closer look at underlying drivers of rapid yen appreciations, highlighting the key role of carry-trade and the zero lower bound as important amplifiers.
Series:
Working Paper No. 2019/136
Subject:
Currencies Econometric analysis Exchange rates Financial institutions Financial services Foreign exchange Futures Money Vector autoregression Zero lower bound
English
Publication Date:
July 1, 2019
ISBN/ISSN:
9781498317344/1018-5941
Stock No:
WPIEA2019136
Pages:
19
Please address any questions about this title to publications@imf.org