The U.s. Dollar Against The Yen Exchange Rate Evaluation Model

The theory on determination of foreign exchange rate is the core part of international finance theory. The fluctuation of the value of a currency not only affects micro-economical activities, but also matters the external and internal equilibrium of national economy. So, to predict the trend of the foreign exchange rate plays an important role for both macro-economical and micro-economical activities.This paper focuses on what kind of impact the current account, GDP and the interest rate and so on and other economic or political factors may have on the exchange rate of US dollar to Japan Yen , and then build a comprehensive estimate model to predict the trend of the exchange rate by the means of the cointegration test and the comprehensive fuzzy theory.In the first part of this thesis , we firstly introduce the different way how the exchange rate should be figured out in different coinages. Part two analyzes all factors that will affect the exchange rate and elaborate how they function on it. The third part introduces the research and production that other scholars have made. The fourth part is the empirical study using the quarterly data from 1997-2004.And this is the core part of the thesis. The ADF-testing results show that all the variables of macro-economy are non-stationary and contain a Unit Root. Then we determine the variables which will influence the interest rate's trend through Granger causality Testing. And then we use the comprehensive fuzzy evaluation to construct the member functions of all the variables according to the regulation of the macro-economy and the relation between the variables and the exchange rate. We find that stable relationships exist between above variables and the exchange rate of US dollar to Japan Yen. And the model we build have a good predict effect in the short run.