My predictions have come true. The yen has stumbled into 2000, giving up much of its recent gains as anticipated.

The high-flying yen has moved steadily lower against the dollar and the euro under severe selling pressure since the start of the year, offering a stark contrast to its strong showing late last year.

Specifically, the dollar climbed past the 106 yen level briefly Wednesday for the first time in more than seven weeks, before settling at 105.75-78 yen in late trading, up from 102.05-10 yen at the end of 1999.

In retrospect, optimism abounded last year about economic recovery in Asia and global economic prospects, setting off a shift in preference away from tangible assets and toward stocks.

Investors drained money out of the bond market, driving up long-term interest rates in the United States and Europe, and switched to Japanese and Asian equity markets in search of quick capital gains.

The end result of the speculative flow of capital was the sudden rise in the yen's value relative to the dollar and other currencies.

After the turn of the year, however, investors have turned cautious about financial assets as Wall Street has been jolted.

The market has begun paying heed to the old warning about the precariously fast-rising pace of share prices on Wall Street, and information and communications issues -- the best performers in 1999 -- have taken a beating as investors cashed in on profits.

To put it another way, the speculation-driven market has plunged into a corrective phase, prompting investors to switch away from high-tech stocks and into domestic demand-dependent cyclical issues.

They are also opting to drain money out of the stock market in favor of bonds.

Against this backdrop, foreign investors have also begun unwinding their Japanese portfolios.

The outflow of money will no doubt keep the yen under selling pressure for some time.

With the Tokyo meeting of financial leaders from the Group of Seven industrial nations drawing near, market participants are becoming cautious about taking major positions.

Fears of further intervention by the Bank of Japan aside, Japan's weak economic fundamentals are working in the dollar's favor vis-a-vis the yen.

The Japanese economy will be passing through a crucial stage in the coming months during the vacuum of stimulative policy measures.

With signs of self-sustained economic recovery still nowhere in sight, economic prospects look more clouded in Japan than in the U.S. and Europe.