Second of two parts
A major challenge for Japan at present is to find ways to counter the deflationary pressure arising from further rises of the yen's exchange rate, not only against the U.S. dollar itself but also against the currencies of China and other emerging Asian and Latin American economies that manage their exchange rates against the U.S. dollar.
We must of course first note that the decline in Japan's export volume, at an annual rate of some 55 percent between the third quarter of 2008 and the first quarter of this year, occurred against the background of global export market contraction. However, according to an estimate by the Organization for Economic Cooperation and Development (OECD), the decline in the size of Japan's export market for this year is 16.6 percent, not much different from the OECD area average of 15.4 percent.