TOKYO - If you want to know what losing control of a monster you created looks like, Japanese monetary authorities offer a dramatic example.
For roughly 25 years now, since at least 1997, a weaker exchange rate has been the ruling Liberal Democratic Party’s top policy tool. Twelve governments later, though, the yen’s drop to 140 to the dollar - a 22% loss this year - is more of an economic liability than a benefit.
In years past, a sliding yen was a boon for exports. Now, the weakest exchange rate since the late 1990s has Japan importing inflation amid surging prices of oil and other key commodities.
The yen’s plummet speaks to two even bigger problems. One is how it might kick off new currency skirmishes in Asia. Two is the Frankenstein-like threat facing the Bank of Japan and Ministry of Finance as they endeavor to halt the yen’s plunge toward 150.