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Banknotes of Japanese yen are seen in this illustration picture taken June 15, 2022.

REUTERS/Florence Lo/Illustration

What’s happening to the yen, in plain English

Japan’s yen was trading at just a hair under 152 to the US dollar Wednesday, the weakest rate in 34 years, triggering speculation about a government intervention. But what the heck does that mean?

The background. Japan’s economy has had a weird problem for a long time: deflation. While most central banks worldwide have set high interest rates to combat inflation, Japan only last week ended its controversial negative interest rate policy.

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