For each of the following, is it part of demand for yen or supply of yen in the
ID: 1161853 • Letter: F
Question
For each of the following, is it part of demand for yen or supply of yen in the foreign exchange market? a. A Japanese firm sells its U.S. government securities to obtain funds to buy real estate in Japan. b. A U.S. import company pays for glassware purchased from a small Japanese producer. c. A U.S. farm cooperative receives payment from a Japanese importer of U.S. oranges. d. A U.S. pension fund uses some incoming contributions to buy equity shares of several Japanese companies through the Tokyo stock exchange.
Explanation / Answer
A. Demand for Yen: By selling US securities in foreign exchange market it gets Yen to buy real estate in Japan
B. Demand for Yen: By purchasing Japanese goods, the demand for yen increases
C. Supply for Yen: In order to purchase US oranges, the Japanese needs US dollar which increases demand for dollar
D. Demand for Yen: In order to buy Tokyo stocks it needs Yen which increases demand
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