A big rise again for the yen today, despite the disaster. Repatriated funds is one thing, but you don't seem to see much repatriated US funds pushing up the dollar.
I find it strange that no matter what the BoJ does it cannot keep its currency down, despite intervention, and in the US despite their own banks shorting dollars, only a gradual rather than seismic falling of the dollar takes place. Everyone expects massive inflation and a deficit best handled by paying off in cheap dollars.
In the early 20th century, the UK government anticipated high inflation after WWI, and floated bonds @ 5% with that view in mind. Low inflation meant that this debt was hard to cope with, and these bonds were defaulted in the 1930's so that anyone owning them nearly 100 years later today has lost over 99% of their money in real terms. It of course was not deemed a "default", but the bum deal still had to be palmed off on the hapless public nonetheless.
It is said that Japan won't need to sell US treasuries to raise funds for damage repairs, but I am not so quick to believe it. Likewise, I'm not quick to believe that the US dollar is in a permenent downtrend puncuated by merely bear market rallies.
It is only a matter of time until everyone realises that Euros are as trashy as dollars as the employment situation improves stateside, whilst not improving in southern europe. Perhaps Trichet is a bigger fool that anyone at the Fed for thinking a strong euro is worth 20%+ unemployment in some euro states that can no longer compete in world markets with the German definition of the Euro calling all the shots.
The UK pulled the plug on trying to prop up the ailing pound in 1992, and the economy sprang into recovery almost straightaway afterwoulds.... Is the memory of central bankers that short?