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Japan is a highly developed and market-oriented economy. The small Asian island ranks as the 3rd largest in the world by nominal gross domestic product and the 4th largest by purchasing power parity. These are surprising numbers from an area of the world that lacks in economic power historically but has recently come around to occupy two of the top five leading global economies.
Japan has recently become the world’s third largest automobile manufacturing country, the leading electronics goods industry, and is ranked among the world’s most innovative countries. The Asian nation is leading several measures of global patent filings as well. While Japan’s neighboring competitors, Russia and China, have ramped up manufacturing competition, Japan has specialized its focuses to robotics, technological advancements, and automotive production (especially hybridized vehicles). The majority of its specialized focuses are in the Kanto region as well as the neighboring Kansai area, which include the Tokyo metropolis. This article will cover the financial system of Japan, as well as a range of market information covering currency, futures, and stocks.show more
Due to Japan’s economic success, they became one of the world’s largest creditor nations. The Asian island nation has consistently showed it is capable of running an annual trade surplus over the years. As a result, 2010, Japan now possesses some 13% of the world’s private financial assets (like their gross domestic product, it is the 3rd largest in the world) at an estimated around $13 trillion (USD). While Japan has been enjoying the benefits of economic boom, they have also taken on the highest ratio of public debt to gross domestic product among economically advanced nations. It is something of a saving grace that national debt is owned mostly by the private, domestic population. However, an even stronger problem facing the Japanese populace is actually its declining population which projections show will continue into the future.
The Tokyo Stock Exchange, which is called Tōshō (東証) or TSE/TYO for short, is Japan’s largest stock exchange located in Tokyo. The TSE is the 4th largest stock exchange in the world when ranked according to aggregate market capitalization. The exchange has approximately 2,000 listed companies with a combined market capitalization of $4.09 trillion (USD) as of 2015 and is also the largest exchange in all of Asia. The Tokyo Exchange merged with the Osaka Securities Exchange, a neighboring but significantly smaller exchange. Japan’s regulatory agency, the Japan Fair Trade Commission, approved the merger and the entity was named the Japan Exchange Group
The Japanese yen is one of the most popularly traded currencies in the world, however the economy behind it is peculiar and requires an in-depth understanding to assess the yen properly. Notably, Japan is a large landmass but after its economic collapse in the 1990’s, it hasn’t been the same economy. Like most advanced countries, Japanese real estate took a particularly hard hit during that recession. Economists have referred to this period as the “lost decade” due to Japan’s stagnant recovery. Japan is one of the few nations that experienced deflation over the last decade, and often reporting extremely low rates of growth, if at all.
While Japan’s economy is experiencing sluggish growth, there are smaller indicators and reports put out that have powerful effects on the yen’s rates. While gross domestic product reports and manufacturing data are the same from country to country, The Bank of Japan uniquely reports the Tankan Survey. This survey is the basis for its monetary policy adjustments and as such is an event of great volatility.
The yen is Asia’s most popular currency on the foreign exchange market. Its relevance is reliant on its status as a reserve currency and also a safe-haven currency during periods of potential stress in the markets. The yen is at risk of being overtaken by the Chinese yuan in the near future, though it will likely take some time for this to take effect.
The yen (code: JPY symbol: ¥ Japanese: 円) is the official currency of Japan. It is also the 3rd most traded currency on the foreign exchange market, following the euro and the American dollar. As a world reserve currency, it ranks behind the United States dollar, the euro, and the British pound. The yen, or Ninja as it’s nicknamed in forex, was a concept for modernizing Japan’s economy. After many failed attempts of orchestrating this themselves, the Japanese modeled the yen after the currencies using the European decimal system. The Bank of Japan follows the circulation of the yen and was given power of the currency regulation, maintenance, and issuance.
Despite Japan’s stagnant economy, its stock market has given great returns to investors who are willing to do their research. The Tokyo Exchange is littered with phenomenal tech stocks as well as automobile companies and financial corporations. The country’s most popular index is the NIKKEI 225, which can be used as an accurate barometer for how the country’s financial markets are fairing at any given time.