Fears that yen weakness will trigger a surge of cheap Japanese exports and hence raise the risks of deflation elsewhere have, so far at least, proved wide of the mark. In practice, Japan’s firms have left their contract prices broadly unchanged and chosen to benefit instead from higher revenues in yen terms from a given volume of sales. Japan might end up exporting more if the world economy takes off, but in better times any lingering worries about “currency wars” would presumably fade.
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