University of Oulu

Currency wars : negative effects of currency devaluation: the case of Japan

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Author: Arauz Figueroa, Rodrigo1
Organizations: 1University of Oulu, Oulu Business School, Department of Management and International Business, Management
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 1.5 MB)
Pages: 129
Persistent link:
Language: English
Published: Oulu : R. Arauz Figueroa, 2016
Publish Date: 2016-05-13
Thesis type: Master's thesis
Tutor: Puhakka, Vesa
Reviewer: Puhakka, Vesa
Sipola, Sakari
Currency wars are featured by competitive currency devaluations. Countries endeavor to reach the bottom of their currency prices in relation to other exchange rates. It becomes competitive when one country follows suit after another country and most of the time, the trading partner, has exacted a devaluation in their currencies. There are various negative effects that riddle the markets of the home economy and that of the foreign markets. Multinational corporations and also the local small and medium size enterprises are the most affected entities next to the citizenry. This study endeavors to provide an in-depth view on the particular situation that Japan has dealt with over decades. Due to the severe and constant deflationary pressure that started since the early 90s Japan has undertaken several policies to prop up the economy. A broad explanation is given about the ample topic of currency devaluation. This analysis stems from an economics topic such as monetary and fiscal policies. But the details explained are elemental to understand the implications of the international business in the core industries in the Japanese market. This is a qualitative research based on discourse analysis. The mode of analysis is particularly helpful in collecting and organizing the data with the most precise manner. Several interviews were recorded, coded and categorized accordingly. Data was collected through a time period spanning over 9 months. The results underlined a deficiency in the application of policies to help the Japanese economy. The various interventions exacted by the Bank of Japan have been rather short lived. The case of Japan still extends yonder as the new policies’ results application is yet to be seen. The currency devaluation that the authorities in Japan have applied have been of no avail. The economy is still lagging in the numbers. The industrial sectors of core production for the economy such as the automakers, electronics and banking have dealt with extreme situations under stark uncertainty. The case of Japan is but one situation that is replicated throughout other countries around the world. As one of the few extant research studies on currency devaluation undertaken via a qualitative approach based on discourse analysis, this study offers a very different angle. This analysis differs from usual research on this area which is quantitative and supported by other parallel research methods. This study follows a call on a more pragmatic understanding of what the situation has been for the particular case of Japan. Discourse analysis has allowed for a very hands-on experience into the very core of the international business by gathering the thoughts of the industry participants and that of the central bankers as well. This study aims at finding the link of government policy application and engineering and how that affects the operations in cross-border business making. Economic policy affects the entire country structure that allows for it to advance and prosper. That is why, this study has taken a particular aim at currency devaluation, as the operations beyond the political borders is what brings a corporation to become a globally sensible, sustainable, profitable and viable entity. Thus, their dealings are affected by how the exchange rate, stability and instability, is monitored and impacted by the governments.
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Copyright information: © Rodrigo Arauz Figueroa, 2016. This publication is copyrighted. You may download, display and print it for your own personal use. Commercial use is prohibited.