BECOA Report on Investing Currencies in the Far East

Prepared by: Brad Saunders


In the world today, the possibilities are endless for people who want to
make money. These opportunities may exist in the form of a bond, currency,
stock, or business venture, but the common tie between them is that it is
possible to make money if you research the market and impose the proper
strategic plans. In this report, the issue of investing money in the currency
markets of the Far East will be my main area of interest. The Far East offers
great potential for a currency trader who wishes to make money. I also have the
option of investing in the European currency market as well, but I feel that the
European market is somewhat too volatile for any significant gains to be made by
pursuing any countries within. As is evident from classroom work in this
course, the Far East has the greatest potential of any area in the world to be
the next big area, in terms of economic expansion. With the many countries
available to select for currency trade, it is very difficult for a student with
limitedresources to accurately and to the best of his or her\'s ability to make
any significant amount of money on the currency market. However, I believe that
by my researching the countries trends in areas such as: Inflation, Capital
Investments, Unemployment, Exports, Budget balances, and Real Growth rates, that
this is the key to making money through currency exchange. In this report my
selections for currency exchange will justified by using the above areas as well
as currency trends and volatilities, that prove Japan, Hong Kong, Singapore,
Thailand, and Taiwan were all good strategic investments.

The first country that I chose to buy currency in was Japan. Japan, as
many people know is a country that has proven itself as having one of the
world\'s most powerful and stable economies. When we examine the Real Growth
Rate in Japan (Fig. 1, pg: 7), we can see that the Japanese economy is growing
every year over the charts history. In the late 80\'s and early nineties the
Japanese economy was peaking and still continues to grow, with recent reports
that the Japanese economy could rise once again as seen in the chart with 1995\'s
increase. The second factor for Japan that I took into affect was their low
levels of inflation. In (Fig. 2, pg: 7), we can see that the inflation level in
Japan is very low, which means that the cost of goods in Japan does not widely
fluctuate from year to year. In the early 1990\'s it is evident that Japan had a
healthy level of inflation which we have learned is between two to four percent.
But as of late, the level of inflation is somewhat a cause for concern because
it has fallen below one percent. However, the economy is still growing and the
only cause for alarm would be if the inflation rate approached zero or actually
became deflation. These first two choices, as is evident have a great bearing
on the fluctuation and growth that the Japanese Yen has shown and will continue
to show. Yet another area that is of great of importance that I looked at
before investing in Japan, is the export market. When we refer to (Fig. 4, pg:
8), it is clear that the value of exports that have been leaving Japan has been
on a steady rise for the last five years. This trend is partly due to the great
demand that the world has put on the Japanese for their high quality and low
priced electronic goods. Since Japan is among the technological elite of the
world, exports have been growing which will drive the value of the Yen up,
causing me to make money because I bought the Yen at a lower price. The large
number of exports that Japan produces is in part due to another area of my
research, unemployment. The Japanese have what I conceive as a great grasp on
controlling unemployment while the principal of low inflation combats against it.
The low levels of unemployment can be seen in (Fig.5, pg: 9), which show Japan
has an extremely low unemployment rate. The low unemployment contributes to the
production of more goods that can be exported and in turn increasing the value
of the Japanese Yen and making money for investors. The final factor that I
took into account when invest in Japan is the Capital Investment made there.
When referring to (Fig. 6, pg: 9), it