Running head: WEEK 2 1

International Finance MG760-144

Week2

Nazifa Antara Prome

Homework Assignment

Monroe College King Graduate School

WEEK 2 2

International Finance MG760-144

Week 2 Homework Assignment

Instruction : Please provide all information based on following requirement.

1. Construct the balance of payment table for Japan for the year 2006 which is comparable
in format to Exhibit 3.1, page 66, to calculate the missing information data (Services;
balance current account; balance on financial account; Statistical discrepancies).
Please show your calculation clearly.

2. Please provide a paragraph to explain your result of your answer

3. Please show your clear calculation. You cannot just input the number only.

A summary of the Japanese Balance of Payments for 2000 (in $ billion)

Credits Debits
Current Account
(1) Exports 898.91
(1.1) Marchandise 615.81
(1.2) Services 117.30
(1.3) Factor income 165.80

(2) Imports -717.72

(2.1) Merchandise -534.51
(2.2) Services -135.56
(3.3) Factor income -47.65

(3) Unilateral transfer 6.18 -16.85

Balance on current account 170.52

WEEK 2 3

[(1) + (2) + (3)]

Capital Account
(4) Direct investment -6.78 -50.17
(5) Portfolio investment 198.56 -71.04
(5.1) Equity securities 71.44 -25.04
(5.2) Debt securities 127.12 -46.00
(6) Other investment -86.67 -91.00

Balance on Capital account -107.10

[(4) + (5) + (6)]
(7) Statistical discrepancies -31.44
Overall balance 31.98
Official Reserve Account -31.98

To find out the Merchandise which lies on Import category. Following is the calculation.

Imports = Merchandise + Services + Factor income

-717.72 = M 135.56 47.65

- M = 717.72 -135.56 47.65

Merchandise = - $534.57

The total Merchandise were imported is - $534.57.

To find out the total balance on current account we need to calculate total Export plus total Import plus
unilateral Transfer. Following is the calculation for balance on current account.

Balance on current account = Exports + Import + Unilateral Transfer

= 898.91 717.72 + (- 16.85 + 6.18)
Balance on current account = 898.91 717.72 10.67.

= $170.52
Total balance on current account is $170.52.
WEEK 2 4

To find out balance of Capital Account we need to calculate the Balance of Capital Account
equal to Direct Investment plus Portfolio investment plus other investment. Following is the
calculation.
Balance of Capital Account = Direct Investment + Portfolio investment + Other Investment
= (-6.78 50.17) + (198.56 71.04) + (-86.67 -91.00)
= -56.95 + 127.52 177.67
Balance of Capital Account = - $107.10

Balance of Capital Account is $107.10.

Lets find out the Statistical Discrepancies.

Official Reserve Account = Balance of Current Account + Balance of Capital Account +
Statistical discrepancies.

31.98 = 170.52 + (-107.10) + SD

Statistical discrepancies = 170.52-107.10- 31.98
Statistical Discrepancies = - 31.44

The statistical Discrepancies is - $31.44