Yen strength is likely to prove short-lived

Yen strength is likely to prove short-lived Visiting clients in Tokyo on Friday I saw the impressive reaction of Japan’s citizens to the country’s earthquake. There was no panic in the streets. People, though clearly fearful of the swaying skyscrapers around them, were orderly and dignified and still ready to help others. The admirable response showed Japan at her best.

The country now faces grave challenges as it deals with the aftermath of the earthquake and the tsunami. In the financial markets, the authorities also need to maintain the trust of investors in Japanese government bonds, restore confidence to the equity markets and prevent the yen from becoming highly volatile.