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Based on the diagrams of question 1, there are two significant causes of exchange rate movement: Supply and demand, and Inflation. The buying and selling of foreign exchange takes place on the foreign exchange market. For example, importers of goods into Japan will use Japanese YEN to buy the currency of the country from which they are purchasing the goods. This act provides a supply of YEN on to the foreign exchange market. Similarly, those who have bought products from Japan will be using their own currencies to purchase YEN – this action creates a demand of YEN. In relation to the diagrams of question 1, the value of YEN increase rapidly during the early 70s to the early 90s, from 1971, which 349.2 YEN : 1 USD, to 1993, which only 111.2 YEN : 1 USD, the Japanese YEN tripled its value in just 22 years. During this period, Japan’s economy grows rapidly, GDP increase by 500% in 20 years, as a result, it creates a high demand for YEN. However, even that, Japan’s exchange rate had increase again in the early 80s; this is due to the great inflation which occurs in Japan at that time, some property loss 80% of its value. After that, an accord has changed everything. On the 22nd September 1985, the Ministers of Finance and Central Bank Governors of France, Germany, Japan, the United Kingdom, and the United States meet in The Plaza Hotel, USA, signing a accord which named the Plaza Accord. The Accord basically decreases the exchange rates of USD against the other four currencies. Before the Accord was signed, the USD has already starts to depreciate; the Plaza Accord accelerates the deprecation. on the other hand, it also helped YEN to regain its value.