Question

suppose that American dollar depreciate against Japanese yen. explain how would this affect the current account balance in Japan

Answer 1

Current account records the transactions of imports and exports of goods and services between two nations. So when American dollar depreciates against Japanese yen, in other way when Japanese yen appreciates against dollar, there would be increase in price of Japanese exports which loses competition in global market and exports decreases whereas the imports become cheaper and imports increase for Japan which would increase the trade deficit thereby increasing the current account deficit as imports exceeds exports.