China's devaluation of the yuan exposes an undefended flank in the Bank of Japan's efforts to jolt its flagging economy out of decades of deflation, which rely heavily on a solid pick-up in overseas demand.
A growing number of Japan's central bankers are privately voicing concern that the problems behind China's currency move will hit Asian demand harder than expected, threatening a Japanese export rebound they hope will stave off the need for another splurge of monetary easing.
Since April 2013 the bank has ploughed ¥170 trillion into a radical quantitative easing program that some, including some policymakers on the bank's board, think has gone far enough — particularly given its questionable returns. Inflation remains barely above zero, for all the firepower thrown at it.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.