The Comparative Study Of Three Yen Appreciation And Its Economic Impact On Japan

Since the collapse of Bretton Woods in1973, Japan began to implement floating ratesystem, and continued the trend of appreciation. Especially after the Plaza Accord, the Yen tothe dollar appreciate substantially. Due to inappropriate policy, it ultimately brought thebubble economy. As the Yen continues to appreciate, Japan’s foreign direct investmentincreased, and that exacerbated the problem of industrial hollowing. Otherwise Yenappreciation made the profits of the enterprise reduced, and seriously affected the normalorder of the Japanese economy. In particular, after the exchange rate reformed in2005, theRMB has been showing appreciation trend. In2010RMB appreciated significantly, and thatseriously affected the normal operation of China’s economy. Therefore, studying the yen threesubstantial appreciation and its influence to Japan’s economy and learning its experience andlessons has theoretical and practical significance to alleviate the RMB appreciation.On the basis theory of Yen appreciation and currency appreciation’s impact of theireconomic, this paper comparative study three period Yen appreciation and its influence toJapan’s economy: the appreciation of after Plaza Agreement, bubble economy collapse andinternational financial crisis. Through in-depth researching and comparative analysing thebackground, reasons of three period of Yen appreciation, it is concluded that the same reasonof three Yen is America’ powerful pressure, but the main reason is different from each other.The main cause of Yen appreciation after the Plaza Agreement is Japan’s economy strengthand the surplus of trade increased quickly. After the collapse of its bubble economy Yenappreciation due to Japan’s huge trade surplus to the United States and its sharp lower interestrates. After international financial crisis the main reason of Yen appreciation is largespeculative funds entered Japan’s market, which pushed up the Yen. This is an obviousspeculation action. As for the different background and reasons of Yen appreciation, itseconomy influence is not exactly same. The first and two Yen appreciation made Japan’sterms of trade and foreign direct investment increased, but the third period decreased; as forthe price of the stock and real estate, in the first period they raised quickly, but the after two period dropped. Finally, the article compares and summarizes the background, reasons andimpacts of three Yen appreciation, and draws a lesson to deal with RMB appreciation.