Ultra-low formations in the exchange rates of the developing countries and the problem of price differentials of agricultural products between domestic and overseas markets
2004
Iwatani, Y. (Doshisha Women's Univ., Kyoto (Japan))
This paper will clarify the annual change in the exchange rates of the Japanese Yen since the 1970's with respect to the other advanced country's currencies as well as the semi-developed countries of Asia since the 1990's, along with the ultra-low exchange rate formation in the currencies of the Asian developing country since the 1990's. The paper identifies the formation of the remarkable price differentials of rice and spinach between grown in Japan and in China as being due to the ultra-low exchange rate of the Yuan. In Japan's period of high economic growth, the ultra-low exchange rate of the Yen continued under the fixed exchange rate system of US$1=360 yen. This forced a decrease in export prices and notably increased the competitive power of exports. Since the Plaza Accord of 1986, the Yen has been estimated almost as much as the currency value. Today, the currency values of developing countries are remarkably underestimated, which becomes the basic factor of remarkable price differential between domestic and overseas markets.
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