
“How is this high-yen recession going in the future?” More interests seem to center on immediate profits; the Japanese possibility of economic growth and the influence of monetary easing led by the United States. However, we must consider the relationship between today’s situation (mentioned above) and the economic trends in mid-long-term to observe the movement of exchange rate.
The exchange rate in Japan had once been maintained 360yen for a dollar. After the floating exchange rate system was introduced, the rate fell to 300, or 250yen; yen:s appreciation, at that time, people said so loud that high-yen recession would ruin industries of Japan. After that, Japan faced the crisis situation of high-yen when the yen-dollar rate fell from around 250 to around 125 yen in three years due to the Plaza Accord in 1985. Like this, Japan has been suffered from the attacks of yen-high, meanwhile, rate for 125 yen of which people made a big deal out would be yen:s depreciation from the perspective of today; we face the rate for 80 yen.
The view of market for yen's appreciation has grown time by time. It is sure that this fact has deep relationships with the economic growth of postwar Japan. The nation which has rapid growth of economy like Japan after the war, has a tendency that its currency gets strong; exchange rate moves toward yen's appreciation in technical term. The record shows that Japan's exchange rate has been moving to high-yen form postwar to 1995, with a few exceptions. Japan had a fixed rate system which made it 350yen for a dollar by 1971, while domestic prices and income relatively boosted in. As a result of this, real rate moved to high-yen. After the government changed the system to the floating exchange rate system, yen was in the strong status in the market.
Sadly, such yen's appreciation trend was over in 1995. After that, yen rate has been moving to yen's depreciation in two ways; one is which the nominal rate has been moving to depreciation of yen, the other is which price of Japanese goods relatively fell in other countries. The turning point which was taken place in 1995 implies that it was the turning point for Japanese economy. The factor of this are thought to be aging society, stagnation of economic policy, and the bursting of the bubble economy.
Now, we should think about the position of yen rate so far when we see it through the long-term economic trends. From yen-dollar rate, today's standard is lower by 30 or 40% than that of 1995 because the price of American goods gets higher by 40% in these 15 years. However, we cannot look on the bright side of the economic situation. The fact that many economists feel it very hard to struggle in this situation (low-yen by more than 30% compared to its peak in the past) leads the fact that the strength of competition of industries and power of Japanese economy gets thin in these 15 years. It can be paraphrased that the power of neighboring countries' economy gets strong in these 15 years. Before we lament over yen's appreciation, we should be sorry that national wealth of Japan is falling down.