NEW YORK — Prime Minister Naoto Kan's wish for a weaker yen is coming true as the strengthening global economy encourages Japanese investors to send more of their money overseas in search of higher yields.
The yen has depreciated 8 percent from its August peak against a basket of nine developed-nation peers, according to the Bloomberg Correlation-Weighted Currency Indexes. The lower exchange rate marks a turnaround from early 2010, when global investors demanding a refuge from Europe's sovereign-debt crisis propelled it to a 15-year high versus the dollar.
Declines are being driven by the growing gap between yields on Treasuries and Japanese government bonds and the revival of carry trades, when investors borrow where yields are low, such as in Japan, to buy assets in higher-returning countries.
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