March 17th, 2008 
jacky How do Japanese do when Surplus Condition on International Trade
To continue my previous post ‘Floating Exchange Rate, Currency up and down, let us see how Japanese do to stabilize their money supply when surplus on international trade?
When surplus happened, that money didn’t entered to Japan, but let it outside as (foreign exchange) devise.
So what they do with their surplus?
Have you ever heard that Japanese become prime lender? Japan replaces the surplus to foreign investment, donor to poor countries, Move to World Bank, IMF as creditor country. Yeah! They do that. So we have to thank Japan that Japan becomes donor country. They avoid Internal Money Supply with aid (low interest rate donor) to third countries. Both of the rules have benefits and no one (countries) are harm with the Japanese move.
They invest their money in many countries; China, Indonesia, Thailand, and ASEAN, direct invest in America (Honda case) and many others countries.
Those tools are taken to stabilize their internal money supply. Outspoken said that Japanese Interest Rate is lower and lower (once a time lower in minus interest rate).
By the way, the surplus condition was used as loan to investor because of lower interest (and also relative triangle exchange rate and future market). Much money is loaned to investors. So we can see the impact. In January when Hot money (loaned from Japan) comes to Indonesia, analysis said that Indonesia begun instability because there was much money, hot money attack stock market, foreign exchange, short run investment on Rupiah. Hot money also attack English Pond sterling, Euro, USD and more currencies. Investors did in short run to profit taking action.
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