There is a lively debate going on in the comments section, but my general thought is basically this: Japan is way too dependent on export industries that are on the lower side of the technological spectrum. For an economy of its depth and size, Japan should not have to worry about keeping the Yen so undervalued, even now, when the currency is at its strongest. Heck, a question - why IS the Yen still so gosh darned weak compared to the U.S. dollar? Why haven't these small-scale manufacturer's died off a long time ago? I know that the Japanese government used massive currency manipulation throughout the 1970's, and that the 1980's saw a basic expansion of the monetary supply (thus, more yen floating around), but what about now? And especially with the influx of investors in Japanese government bonds and such, how on earth is the Yen still so weak? Maybe because most JGB-holders are themselves Japanese, so they are just trading yen into the system for the government to zip the same Yen back out as government spending? I know so little about everything.