ManusJustus, the problem with your reasoning is that it's not a linear relation between currency value and economic situation. There are ways to modify artificially the exchange ratio, as the Chinese government does to reduce the Yuan's value.

This has just happened this morning:

http://finance.yahoo.com/news/Japan-intervenes-in-currency-apf-162919431.html

Japan intervenes in currency market to weaken yen

TOKYO (AP) -- Japan waded into the currency market Wednesday for the first time in six years, buying dollars to weaken the surging yen, which is battering famed Japanese manufacturers like Toyota and Sony after spiking to 15-year highs.

...

The currency has risen about 10 percent against the dollar this year, and business leaders had been pressing the government for help. A strong yen hurts exporters -- the mainstay drivers of the country's still-fragile economic recovery. It erodes their foreign income when repatriated and makes their products less competitive in overseas markets. Toyota Motor Corp. estimates that every 1-yen climb versus the dollar saps 30 billion yen ($351 million) from earnings.

...

The yen, meanwhile, is seen as a safe haven currency. Japan's government debt is largely owned by domestic investors, making the country less at risk to the capital flight that can occur when economic or political shocks cause confidence to collapse.

And even with interest rates near zero, Japan's real interest rate is higher because of persistent deflation. For foreigners, that means yen-denominated assets will look more attractive as prices keep falling.

Which is what the Japanese are doing now, obvioulsy, but before the government didn't intervene and their currency value increased.  I like that Japan is going to buy American dollars to make their currency worth less, but you still argue that America is doing better than Japan.

The Chinese government intervenes with currency all the time to drive exports, unlike countries like America and Japan who let the market value their currency and only intervene in tough times.

I've never said that USA is in a better situation, their crisis are very different. Japan has had 20 years of deflation, and has a very big demographic problem. USA has it's own problems, but their crisis aren't comparable. What I've said is that for an export country as is Japan, a strong currency is one of the worst things that could happen to that economy.

America's and Japan's economic problems are comparable, and you can look at the value of the dollar and the yen to see the results.

The comparison between the Japan and the United States is the fundamental topic of this thread, "Yen gains on Dollar."  If you don't think that the USA is in a better situation, then I don't see what we are arguing about.

We are talking on how a strong yen affects the Japanese companies that sold most of their products outside Japan, as Nintendo and Sony are. You were the one who said that Japan is in a better position than America, which is debatable, and who said that a strong yen means that Japanese economy is in a great situation, which is completely false.

In my view, both countries economies are somewhat fucked, but for way different reasons. USA has a problem with the budget deficit and Keynesian economics (Obama's New Deal 2.0 is one of the examples), Japan has a systemic problem of very old population and lack of adaptation to the new economic situation.

I don't think it has much to do with their economy. The rapid devaluation of the Western Currencies is mostly down to a lack of faith in stability (Euro and closely related currencies - like the GBP), and massive money-print outs to help "stimulate" the economies (all Western currencies - particularly the dollar).

All that needs to be happening for Japan is that the demand for the Yen needs to be recessing at a slower rate than the supply - neither of those would suggest that the economy is doing "better".

I'm not an expert on the Japanese economy, or what-have-you, but I'm guessing what's happening is that the Japanese Government has borrowed a lot from Japanese banks, and now the banks are questioning whether or not Japan can repay (what with all the deteriotating economic conditions), as a result of this, the Japanese banks are no longer lending money - essentially restricting the money supply. This has resulted in both the deflation we have been seeing, and the rally of the Yen (which would have been pushed a lot by spectators after it started hitting the media). The BoJ have started printing money to try and solve the situation... should have short term relief on currency value, though, price levels? I'm not sure which way that would go.

Bad news for PS3 and Wii, DS and PSP. Bad news for Sony and Nintendo due to  rising Yen. On the bright side good news for the XBox 360 and Microsoft with falling US dollar. 

Great news for 360 as Microsoft can afford to initiate price cuts. Price cuts would weaken the profitability for Sony and Nintendo with a rising Yen. 

At least euro has risen a bit against yen in past months.

Is the dollar's outlook getting any better?