JAPANESE TERM
A Japanese yen rate of one U.S. dollar, generally known as European terms. A Japanese yen quote of ¥105.65/$ is called Japanese terms.
J-CURVE EFFECT
Devaluation is conventionally believed to be a tool of improving a nation’s trade deficit. It is believed that it takes time for an exchange rate change to affect trade balance. International trade transactions are prearranged and cannot be immediately adjusted. For this reason, the J-curve effect suggests that a decline in the value of a currency does not always improve a trade deficit. A currency devaluation will initially worsen the trade deficit before showing signs of improvement. The further decline in the trade balance before a reversal creates a trend that can look like the letter J (see Exhibit 76). The J-shaped curve traces the initial decline in the trade balance followed by an increase.
EXHIBIT 76
The J Curve
