The rate was 250 back then. Factor in a dozen years of awesome economic growth in the U.S., and not much of anything from Japan, and you realize that equilibrium will be restored when dollar-yen hits 300 or so. Right???
yes, and in addition:
1). at the time (1980's), fiscal restraint by the US Congress was nearly non-existent. Today, there has been a turn for a more responsible policy, which as far as I can tell may continue, given further strength to the US Dollar.
2). Japanese mismanagement of their own currency strength translated (in part), to a buying frenzy of overvalued US Real Estate, which since then has experienced a re-evaluation (at lower levels). In the process, causing some head-aches to those owners.... (or former owners in some instances).
3) a couple of experiences with Latin American currency devaluations (1982 & 1984), have given additional demand to the US Dollar, as a certain safe haven. Same thing for SE Asia in 1997.
4) the slow discovery of mismanagement in Japanese banks/insurance companies, triggering further weakness in the Yen. Making the Japanese typhoon..... a gentle breeze. To the point of realizing that "the emperor had no clothes...."
In my eyes, yet another proof that free markets, and [I assume] honest dealings, seem to be the best medicine, against economic disease....
However, I could not give a specific number to the exchange rate, that is what markets do.
imo.
Please feel free to correct my faulty [and lengthy] thinking. |
