Question

Elaborate the object
"Many domestic investors are likely to invest in Japanese market". How will this
affect the
a. Foreign exchange rate
b.Current Account deficit in India.​

Answer 1

Answer:

a. The exchange rate has an effect on the trade surplus or deficit, which in turn affects the exchange rate, and so on. In general, however, a weaker domestic currency stimulates exports and makes imports more expensive. Conversely, a strong domestic currency hampers exports and makes imports cheaper.

b.A current account deficit means the value of imports of goods/services / investment incomes is greater than the value of exports. It is sometimes referred to as a trade deficit. Though a trade deficit (goods) is only part of the current account.

If there is a current account deficit, it means there is a surplus on the financial/capital account. See: Balance of payments for an explanation of the different components.

Answer 2

Investing in Japanese market:

Many domestic investors are most likely to invest in market of Japan. This would be very beneficial for them in future because of the Japanese largest economy.

It is very significant in foreign exchanges as well in current deficit in India

Political stability, rigorous corporate governance and low estimates make it an excellent time for investing in the market of japan. In spite of being the 3rd largest economy in the world by gross domestic product, Japan is an postscript to many investors.