10/05/13 18:10 CET
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The Japanese yen has gone through the 100 to the dollar mark for the first time since April 2009, and is now at a four-year low edging towards 102.
Since its slide began the Nikkei stock exchange index has ballooned by more than 55 percent since November.
It is part of the government’s determination to drive the country out of two decades of deflation, but some say they are rigging the market.
“The Japanese government or the Japanese central bank has absolutely no intention to engage in currency manipulation. Our sole objective is to stop the negative spiral caused by deflation, revitalise the Japanese economy and in turn, contribute to the growth of the world economy,” said Economics Minister Akira Amari.
Exporters are already feeling the benefits, reporting improved profits and getting more bang for their bucks when they bring those profits home.
The government’s decision to double the money supply also means consumers should feel more flush and start spending again.
The immediate downside is that dollar-denominated energy costs are rocketing, and in the longer term if the economy does not grow in response to this medicine, the yen could weaken too far, or collapse.
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