Research on the Influence of US Dollar Interest Rate on Japanese Exchange Rate

The volatility of the US dollar interest rate in recent years has had a significant impact on the Japanese exchange rate's trend. This paper first examines relevant literature regarding the US dollar interest rate and Japan's exchange rate. It then builds a vector autoregressive model to discuss how the US dollar interest rate affects Japan's exchange rate. Finally, it offers some recommendations and countermeasures to create a stable exchange rate system, prevent sharp exchange rate increases, encourage businesses to adopt a "going out" strategy, support the growth of foreign direct investment, promote the advancement of industrial structure to a higher level, and improve the competitiveness of export goods.