Quantitative easing policy and its impact on the direction of capital movement : record study of the exchange rate of the Japanese yen against the us dollar for the period 2008-2019

Abstract EN

In this study, we attempted to track the impact of quantitative easing on the currency of both Japan and the USA, using the Vector Error Correction Model (VECM) during the (2008M1-2019M6).

Where did the results result, that the pursuit of the quantitative easing policy caused a decrease in the value of the country's currency that adopted this policy, as a result of the gradual decline in the long-term interest rate, which leads to the exit of capital and its investment in countries with a higher interest rate, which happened in Japan, where the flow of investments towards Abroad, the demand for the Japanese yen decreased, which caused a decrease in its value against the US dollar.

Therefore, Japan had to take advantage of this decline in order to encourage its exports.