US dollar falls to 14-year low against the yen

[NJ5]

MontanaHatchet said:
Japan's doing pretty horribly, why is their currency so strong?

I need an economics lesson.

Japan has been in deflation for a long time as you might have heard. To combat this, the Japanese central bank has had its interest rate set very near (or at?) 0 for a long time. This was an attempt to weaken the currency and cause inflation.

Then the recession started in other places (the US first), and other central banks like the American one came and did the same as Japan was doing, which weakens the dollar against everything else... Japan has no effective way to fix it by themselves, as their interest rate is already as low as it can be. Unless they start paying people money to borrow.

Further... With the American central bank lending money for just about nothing, and with the dollar being a plentiful currency, lots of investors are borrowing in dollars to buy other currencies and take risks in the stock market... which also weakens the dollar and strengthens other currencies.