Mkt 545 Chp11

MKT 545 1. Why did the contraction of the U.S and Japanese economies and the rise in the abide by of the hanker hurt Sonys exports from Japan? The size of the U.S. fasting and political stability, even in the face of a presidential election in November 2008, tend to make the United States an kind 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 meantime in the U.S. economy, export dominated countries, especially emerging markets, were anticipate to suffer. Also, the address crisis that the United States was going through was expected to boom out 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 also b ecame a safe-haven currency during the crisis, along with the dollar. Obviously, the yen is the most alpha currency in Asia, because Japan has the second-highest foreign-exchange reserves in the vicinity and the world, just after China, but it is a freely standardized currency with high market liquidity and is also an important trading currency.

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

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