Dollar vs. yen

April 16, 2015 10:00 AM
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Japan has experienced economic malaise for decades now. The powerful earthquake and tsunami that hit the Asian nation in 2011 set Japan many steps back in terms of a recovery. The horrendous nuclear disaster that followed added insult to injury for the country. However, Japan has always been an important country when it comes to technology and global business in general.

Japan was one-step ahead

I remember first traveling to the country in the mid 1980s. What struck me about Japan was the fact that the Japanese public always seemed to be one-step ahead of us Americans in terms of technological advance. 

I saw the new television technology in stores in Tokyo -- months later the new electronics became available back home. Cell phone and computer technology became ubiquitous in Japan before it made its way to the United States. I was always amazed how Japanese consumers had access to the products before Americans. I became used to seeing the products of tomorrow during journeys to Japan. Long before everyone in the United States was walking around with cell phones, the fad caught on in Tokyo. However, the overall economy of Japan suffered at the same time.

A real estate and stock market bubble in the nation burst in the early 1990s and Japan has had a difficult time digging its way out of the economic mess. Export-led growth was traditionally the hallmark of Japan's expansion. Remember how "made in Japan" was on almost every cool product we bought in the 70s and 80s? America's consumerism provided a huge boom for the economy of the Asian nation back then. An aging and falling population has plagued Japan, which is not a positive when it comes to productivity growth. Finally, the Japanese continue to have a huge level of government debt. This is due to slow growth, aging population and stimulus programs. All of this adds up to volatility in the value of the Japanese currency -- the yen.

Japanese Yen: A volatile currency with opportunity

The yen recovered against the U.S. dollar between 2002 and 2012 -- however, the earthquake and tsunami tragedy that followed coupled with recent strength in the U.S. dollar has caused weakness in the Japanese currency. Additionally, a difficult relationship with the strongest nation in the Asian region, China, over territorial disputes has caused pressures on Japan's economy.

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About the Author

Andrew Hecht,