The Yen collapsed to a 4-1/2-year low against the dollar on Friday on the heels of positive US labor market data and as finance ministers from industrialized countries met in Britain.
The Japanese Yen has surpassed the 100 to the dollar mark for the first time since April 2009, and is now at a four-year low edging towards 102. According to reports, this 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.
Japanese exporters are already feeling the benefits from the Yen collapse, reporting improved profits and getting more bangs for their bucks when they bring those profits home.
"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, revitalize the Japanese economy and in turn, contribute to the growth of the world economy," said Economics minister Akira Amari, according to Nasdaq.
Amari reiterated Japan's position that the country isn't engaged in currency-market manipulation.
"We have no intention to manipulate the foreign-exchange rates. The goal of our economic policy is to deal with the negative effects of deflation. Exchange rates should be determined by the market," he said.
Amari did, however, acknowledge that the strong yen would hurt the Japanese economy, saying that "excessive strength in the yen has a certain degree of impact on the economy."
Analysts believe the yen will be a topic for discussions between the finance ministers and central bankers of the world's leading industrial economies. "In a way, this recent yen move could not have been more badly timed, coming as it does on the eve of the latest G-7 meeting, with further yen losses quite likely," said Michael Hewson, senior markets analyst at CMC Markets, according to the Associated Press.
