As a result, interest rates have come down dramatically. The lowest ever. Certainly one of the lowest in the world. And because 2.4 is too low, Japanese investors are buying US Treasuries, just like they were in the 1980s. The Japanese investors are creating a demand for dollars and pushing the dollar higher.
Japanese exporters follow that lead created by Japanese investors, and export like crazy.
Unfortunately, that's probably true. During October and November that was definitely the case. I think October saw the largest single- month purchases on record. The Wall Street Journal recently ran an article reassuring investors that Japanese were indeed not going to reduce their purchases of T-bills. . . . Those guys are frequently wrong.