Mkt 545 Chp11

MKT 545 1. Why did the contraction of the U.S and Japanese economies and the rise in the pry 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 benignant 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 deceleration in the U.S. economy, export dominated countries, especially emerging markets, were judge to suffer. Also, the address crisis that the United States was going through was expected to draw 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 too bec ame a safe-haven currency during the crisis, along with the dollar. Obviously, the yen is the most of import 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 similar currency with high market liquidity and is also an of the essence(predicate) trading currency.

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

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