While most of the ire of Central Banks is currently focused on China, it seems Japan may also deserve some of the attention. Despite the current economic boom and concomitant current account surplus in Japan, the Japanese Yen continues to lose value against the world’s major currencies, a phenomenon that has baffled analysts. In fact, the Yen is currently nearing an all-time low in trade-weighted terms, and recently touched an all-time high against the Euro. Some have speculated that fear that the Bank of Japan will intervene if the Yen rises too sharply has depressed the Yen. Others believe that it is Japan’s low interest rates which have sustained the always-popular carry trade and driven many to sell the Yen in favor of higher-yielding currencies. Still other experts think it is Japan’s ever-growing forex reserves which keep the currency in check. The Economist reports:

Last week was the 21st birthday of the G7’s Plaza Accord, which triggered a huge rise in the yen. The yen is much more undervalued today than it was then.

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