ECS1345 Financial Markets, Institutions and Banking

Reference no: EM132484594

ECS1345 Financial Markets, Institutions and Banking Assignment - Middlesex University London, UK

Discuss the questions below. Please apply the theories learned from the module to support your discussion.

Case Study: Japanese Yen and Japanese Economy

The graph below is the exchange rate of Japanese Yen per US dollar (¥/$) between 2012 and 2015.

Q1. Is it a depreciation or appreciation of Yen? Calculate the percentage change of Yen appreciation (or depreciation) from 77 ¥/$ (Jan 2012) to 120 ¥/$ (Dec 2015).

Q2. Describe the exchange rate changes of Yen against Dollar during this period.

Q3. Collect data for Japan's GDP growth rate (either quarterly or yearly) during 2012 -2015, data for inflation rate CPI (monthly), and data for Japan's monthly exports and imports during 2012-2015, calculate Japan's monthly trade balance based on the monthly export & import data you get. (Internet is a good source for data.) Present your data in tables and graphs, and describe their patterns.

Q4. Discuss what are the long-run determinants of exchange rates?

Q5. Can you explain the reasons why exchange rate of Japanese Yen against US dollar behaved like this in the past four year?

Q6. In theory, what do you normally expect of the impact of an appreciation or depreciation of a country's currency on its exports and imports? Is it consistent with the reality in Japan on this issue?

Q7. Meanwhile, the main Japan stock market index Nikkei 225 show the pattern in the graph below from January 2012 to December 2015.

1) Calculate percentage change of the Nikkei index from 9k in November 2012 to 18k in December 2015.

2) Discuss why Nikkei index went up so much during 2012-2015.

3) Do you think the exchange rate changes of Japanese Yen against US Dollar influenced Nikkei index changes during this period? Why?

4) What is efficient market hypothesis? Do you think fundamental analysis is useful if the market is assumed to be weak-form efficient? Explain why or why not.

Attachment:- Financial Markets, Institutions and Banking Assignment File.rar

Reference no: EM132484594

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