The continued strengthening of the Yen is a very bad thing for Japan and the world.
The WSJ has a front-page article on the issue in today's digital edition. Evidently, markets are closed on Mon. in Japan for a holiday, yet the Central Bank of Japan expects to intervene into currency markets to prevent the Yen from slipping to less than 80 per dollar.
My theory is that the imbalance of capital flows brought about by pegging to the Dollar (China) has led to the Yen being stronger even before the earthquake and tsunami.
A further increase in the Yen will snuff off Japanese exports and allow other East Asian nations to gain market share for various manufactured products. China has a great deal to gain from an ultra strong Yen, even as the ruling elite chooses to fix the rate of exchange for the Yuan.
The great natural disaster of the Sendai earthquake and tsunami might be the event to trigger an accelerated currency war between China and the rest of the world.
It is my opinion that this is the reason why the G-7 is acting together to stop the Yen's rise.
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