The Japanese yen has fallen to an 18 month low against the US dollar, hitting fresh lows for four days running. The falls have been triggered by growing gloom over Japan's economic prospects, following a surprise fall in industrial output in November. But the weak currency is one of the few options left to Japan to finally kick-start its economy. The fall in the yen's value has been sharp and consistent over the past five months.
Japan has little option but to tolerate a weaker yen to kick-start the economy.
On Monday, one dollar bought 118.72 yen, compared with just 105 yen in September. And there is little motivation for the Japanese government to stop the slide, since the weak yen supports Japan's export industry, especially the car and electrical goods sectors. Japan has a large budget deficit and a near-zero interest rate, giving it few other ways to lift the economy. At the end of last year, Japan looked to be making a tentative recovery from its worst recession in 50 years, and the government is desperate to stop the economy sink back down again. The negative signals from Japan's industrial giants has depressed the Tokyo Stock Exchange as well.