US, Japan in a currency war now

And commentators are bandying about terms like ‘a second Pearl Harbor’ and ‘a second Hiroshima’ to describe it

JAPANESE Economics Minister Akira Amari has chided countries that charge others with weakening their currencies in order to boost exports while at the same time use the same tactics themselves. He is quite right. And some are wondering whether more than mere hypocrisy is involved.

When the Bank of Japan (BOJ) launched its monetary bombshell on April 4, taking the rest of the world by surprise and financial markets by storm, some termed it Japan’s “second Pearl Harbor” after the surprise military strike by the Imperial Japanese Navy on the US naval base in Hawaii in December 1941.

Now they are wondering whether the follow-up action last month by the US Federal Reserve in hinting at an end to quantitative monetary easing (QE) might have been a “nuclear” response by Washington to Japan’s bold attack on deflation and the strong yen – a “second Hiroshima”, so to speak.