Most Asian counties face similarly grim scenario. We are now witnessing world financial markets and currency movements that have been disconnected from and are inconsistent with economic fundamentals. This is because currencies are an imaginary creation of governments and banks. As governments and banks move closer to insolvency, the value of currencies must fall. The interplay between the U.S. dollar and the Japanese Yen is a great illustration.
Japan has a large trade surplus and is a capital surplus country.
Holders of Yen are concerned about the solvency of Japanese banks and possibly the government itself. With interest earning potential almost non-existent, holders of Yen are moving to safer foreign currencies where they can also earn several times higher interest than in Japan. This is making Japanese companies extremely competitive and has brought a large deflationary shock onto world markets. This deflationary shock has already been felt by most countries in Asia who were unable to keep their currencies pegged to the U.S. dollar in the face of a major devaluation of the Japanese Yen. In light of the insolvency of the Japanese financial system, investors will continue selling Yen, driving its price down further.