Mkt 545 Chp11

MKT 545 1. Why did the contraction of the U.S and Japanese economies and the rise in the honor of the hanker hurt Sonys exports from Japan? The size of the U.S. frugality and political stability, even in the face of a presidential election in November 2008, tend to make the United States an lovely 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 slowdown 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 blow a fuse 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 excessiv ely became 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 neighborhood and the world, just after China, but it is a freely transmutable currency with high market liquidity and is also an meaning(a) trading currency. Also, with Japanese interest rates so low, some(prenominal) investors were acceptance in yen and investing their proceeds overseas to array 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 strong yen was also annoyance Sonys financial statements. As Sony translates U.S dollar or euro financial statements into yen, net profit assets and earnings will be charge less in yen, dragging down Sonys consolidated results. The only(prenominal) way to offset this pretermit is to sell more and mend profit margins, both of which atomic number 18 hard to do in a s! low planetary economy. From a cash-flow point of view, Sonys operations abroad are...If you exigency to get a secure essay, order it on our website: OrderCustomPaper.com

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