As the yen surpassed the 150 per dollar level, Japan’s economic and financial policy makers face growing pressure to change course.
A currency this weak is bad for Japan, bad for Asia and bad for the world. Measures to strengthen the yen threaten efforts to promote stable and sustainable price increases and grow wages as a result, however. Raising interest rates — the principle measure readily available to strengthen the currency — could also increase the government’s debt burden, an ominous concern when that deficit is already twice the country's gross domestic product.
Japanese policy makers can take some solace from the fact that the factor driving this situation is the strong dollar. That does not release them from an obligation to minimize the impact of decisions made in Washington and protect this country’s economy.