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The yen should now be trading for between 78 and 85 yen to the dollar. The current situation can be considered an "adjustment" of the yen that had been weaker than its theoretically appropriate level.
The short-term interest rate is already close to zero and the long-term interest rate has not yet approached that level. So there is still room for the BOJ to apply pressure to lower the long-term interest rate by expanding its supply of funds.
However, both the government and the BOJ have few options available. They should hold on to measures that may become necessary if the yen appreciates further or if the economic slowdown becomes more severe. A BOJ study has found that large manufacturers have forecast an exchange rate of 90 yen to the dollar for the second half of this fiscal year.
A BOJ study has found that large manufacturers have forecast an exchange rate of 90 yen to the dollar for the second half of this fiscal year. So author has opinion that It is understandable that the BOJ would want to take steps if exporting companies were suffering.
The credit crunch and fears about failures in the financial sector have caused private investors and even many governments to put their trust in US Treasury Bills, thus boosting the value of the greenback.
Japan has accumulated large volumes of foreign currency. Because its usual trade surplus. And that money has been re-invested back in the United States and elsewhere.
First, Japan did not suffer large losses from the sub prime crisis, leaving Japanese banks in relatively good shape. Second, Japanese investors are deleveraging their overseas investments, creating large cash inflows into Japan. Third, the yen is now seen as a "safe haven" currency.
Result of all I think that yen is temporary safe position. And it is important Japan is not have the force of financial. Because the downside of the yens strength is that it is hurting Japanese exports. So it is not strange that yen come to be weak.