Mkt 545 Chp11

MKT 545 1. Why did the contraction of the U.S and Japanese economies and the rise in the honour of the hanker hurt Sonys exports from Japan? The size of the U.S. abstemiousness and political stability, even in the face of a presidential election in November 2008, tend to make the United States an sweet place for investment. Thus the fear factor seemed to be a critical vote for the dollar during the crisis. This is a short-term phenomenon, however, and go out eventually be replaced by economic fundamentals. With the subnormality in the U.S. economy, export dominated countries, especially emerging markets, were evaluate to suffer. Also, the address crisis that the United States was going through was expected to lead to separate countries. The euro is obviously a strong and of the essence(predicate) currency, but It lacks a strong central government that can coordinate a response to economic crisis. About the yen. Interestingly enough, the yen al so became a safe-haven currency during the crisis, along with the dollar. Obviously, the yen is the most all important(predicate) currency in Asia, because Japan has the second-highest foreign-exchange reserves in the locality and the world, just after China, but it is a freely transformable currency with high market liquidity and is also an important trading currency.

Also, with Japanese interest rates so low, some(prenominal) investors were borrow in yen and investing their proceeds overseas to embark on access to higher returns. When the crisis hit, the money quickly left-hand(a) the emerging markets a nd returned to Japan, a practice called carr! y trade. The strong yen was also smart Sonys financial statements. As Sony translates U.S dollar or euro financial statements into yen, unclutter assets and earnings will be charge less in yen, dragging down Sonys consolidated results. The only(prenominal) way to offset this fling off is to sell more and mend profit margins, both of which are hard to do in a slow world(prenominal) economy. From a cash-flow point of view, Sonys operations abroad are...If you urgency to get a secure essay, order it on our website: OrderCustomPaper.com

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