| Abstract | A complex set of market forces are pushing down the value of the Japanese yen, which in turn is affecting Japan's merchandise trade flows. Since Hong Kong's leading exports to Japan are mostly consumer goods, the recent weakening of the yen is contributing to a decline in its exports to Japan. Domestic Japanese manufacturers are unlikely to be major competitors for Hong Kong exporters as they generally do not produce the same kinds of products. Recent trade figures fail to support the idea that devaluing one's currency will lead to an increase in exports to Japan, at least in the short run. Japan's foreign direct investments also appear to be relatively unaffected by the weakened yen. |
|---|
