Investing Currencies in the Far East


BECOA Report on
Investing Currencies in the Far East
Prepared by: Brad Saunders
Introduction
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 limited resources 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.
Japan
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