Why is the Yen appreciating?

BBC Business News has an excellent report and supporting video which assesses why the Yen has strengthened following the sad disasters besetting Japan.

An example of how financial flows impact on exchange rate volatility. The normal suspect, currency speculation, may not be the major driver here.

Or are speculators ‘gambling’ that repatriation of funds to finance reconstruction means the Yen will rise in value so ‘buy cheap, now’ and ‘sell later, dear’?

And how can the world’s central banks respond? And why?

Much to debate in class

Yen against the US dollar

Data from Timetric.

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Japanese Yen vs US Dollar, exchange rate, daily from Timetric