The Japanese yen absorbed heavy damage this year, briefly falling to a 34-year low against the US dollar. Selling pressures persisted even after the Bank of Japan raised interest rates out of negative territory, leading authorities in Tokyo to threaten another round of FX intervention to defend the currency. Several factors lie behind the yen’s collapse. First and foremost is the wide interest rate gap between Japan and the United States. Despite the Bank of Japan’s historic move, rate differentials are still extremely wide. As such, capital continues to flow out of Japan, searching for higher returns abroad. Rising ... (full story)