The Bank of Japan and US Treasury spent an estimated $US97 billion last week to prop up the yen after it crashed through 162 to the dollar, driving it briefly to 155.21. The exchange rate has since slipped to just over 157.7, suggesting the intervention's effects are fading and further action may be needed.

Japan's economic fundamentals — extreme government debt exceeding 200 per cent of GDP, rising inflation and spending plans — are expected to reassert downward pressure on the currency. The large gap between Japanese bond yields (1.6-3.91 per cent) and US yields (4.2-5.2 per cent) has fuelled a multi-trillion dollar carry trade, with Japanese investors borrowing cheaply at home to invest offshore, keeping the yen weak, Stephen Bartholomeusz reports for SMH business (AU).