Business Insider – Ever since the financial crisis began in 2007, the yen has been stronger than it should be. The yen has been negatively correlated with the business cycle, just like the dollar is, but even more so. When the financial system almost collapsed, hedge fund managers and other yen borrowers had to liquidate their assets and buy yen to repay their loans, resulting in a strong yen.
After the Fed and others stimulated the global economy, the yen should have weakened, but the weakness was minimal – something was different. Two things had changed. Global growth was so forced and feeble that the Japanese did not invest enough offshore – they kept too much money at home – and hedge fund managers could borrow dollars for even less than it cost to borrow yen.