Thursday, March 15, 2012

The yen falls and the Nikkei climbs. Economic recovery?

The Tokyo stock market index has regained the 10,000 points and the yen has lost 7% of its value since the beginning of the year. The Yomiuri newspaper has described the combination as a sign of economic recovery. Others are the increase, for a sixth consecutive month, of sales of cars, luxury watches and first class airline tickets in the Japanese market.
On the other hand, the increase in share prices appears to be due to a return of investors, including foreigners, who know a low yen  improves sales of large export companies.
Why does the yen fall? There are several explanations. Among them: those who speculate in currencies now seem to opt for the Brazilian real and the Korean won; the flow of money repatriated to Japan to escape the European instability and to address the losses caused by the tsunami has slowed.
Obviously, a cheap yen is not going to please everyone all the time in Japan. For example, it wont make happy sellers of luxury German cars or Japanese drivers when they go to fill up their tanks.

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