News Analysis: Experts divided on possible economic impact of Japan's catastrophic quake (4)

08:34, March 14, 2011      

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As most of Japan's recovery is driven by exports, the key is to make sure its currency doesn't strengthen, O'Neill said.

But the yen once jumped 1.4 percent following the quake on Friday.

In the wake of the quake, some Japanese investors are repatriating yen to Japan to fund the clean-up, reconstruction and insurance, which could increase demand for the Japanese currency and drive up its value.

The Bank of Japan plans to further ease currency policy by offer more yen to the market on Monday, a move aimed at curbing yen strength.

A UBS report said despite the pressure from the appreciation of yen, "we don't expect USD/JPY to break through 80," as the possibility of another intervention by the Bank of Japan remained.

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