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Why could a devaluing yen panic Germany

1. From 1995 to 1998, the Bank of Japan devalued the yen from 95 to 142.

2. A strong yen means less Japanese exports and more foreign imports. The resulting, trade surplus can cause yen devaluation.

3. A weaken yen means more us companies will move to Japan because American products are cheap in Japan.

4. Some believe, Hedge funds borrowed over $1 trillion in low interest yen denominated loans and arbitraged the money into foreign stocks, foreign currency, and foreign bonds with higher yields. The bank of Japan artificially low rates created incentives to borrow money from the banks.

5. In 2010, the yen was 85. The strong yen resulted from rising individual industrial productivity, cost cutting measures, and labor reduction. However, the japanese economy remained deflated. Investors fearing European economic decline fled to the yen as the stable currency. In four years, the yen appreciated 45 percent against the dollar. Investors considered the yen a safer investment than the euro, believing the yen did not fluctuate. Investors remained apprehensive about buying Australian and Canadian currencies. China's slowing economy was linked to Australia and Canada economies. By 2011, the yen was 76 and Major investors were buying yen during the crisis, as global stock prices were down.

6. Yen was exchanged for New Zealand dollar, South African rand, and the Mexico peso.

7. In 2010, bank of Japan sold 2.13 trillion yen and bought dollars, in an effort to devalue the yen and improve exports.

8. A strong yen encourages Japanese manufacturers to move operations overseas . 9. The strong yen was moving contrary to Japan's slow growth and prolonged deflation.

10. After the earthquake/tsunami struck Japan causing over $500 billion in damages. Speculators believed Japan would sell off foreign assets and buy yen, so the bet on yen appreciation. Japan's supply chain was disrupted and electrical shortages occurred.

11. The strong yen had given Japan companies money to spend. In 2011, Japan completed $80 billion in deals. Since 1996, Japan has lost 3 million jobs to overseas markets.

12. The strong yen meant companies would have to acquire foreign parts rather than local parts, too take advantage of the exchange rates and differences in product price.

13. The elderly want a lower yen seeking higher yields for pensions and savings. Japan's pension manages $1.14 trillion in assets and they chose higher yields. Japan want to inflate the yen, one percent a year.

14. In 2012, the yen was exchange for the renminbi on the Tokyo exchange. Commissions on currency exchanges will be paid once.

15. A 30 to 40 percent negative transition from strong to weak yen is possible. Japan's neighbors must have strong banks to withstand yen devaluation.

16. Japan has 1,000 trillion of public debt or $94,000 of public debt. Japan has high debt and low bond yield rates.

17. Japan's tax base is decreasing due to less jobs and higher taxes.

18. Japan has a weak economy and a strong economy, this is suspect.

19. A weak yen could panic Germany.

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