THE EFFECT OF THE QUANTITATIVE EASING ON THE CAPITAL MOVEMENT: THE USD/YEN EXCHANGE RATE 2008M1-2019M6

Abstract

In this study, we attempted to track the impact of quantitative easing on the currency of both Japan and the USA during the (2008M1-2019M6) study period by formulating an econometric model where the results indicated that the low long-term interest rates in Japan compared to the United States allowed the outflow of investments. This movement reduced the demand for the Japanese Yen, causing its devaluation against the US dollar, which further on allowed Japan to use it to encourage its exports.