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Why The Japanese Yen Could Continue To Decline

The Japanese yen continues to fall as economic growth and inflation measures wane, even as the employment situation is steadily improving. CurrencyShares Japanese Yen Trust (FXY) is down over 15% since July, as is seen in the chart below.

(click to enlarge)

Economic growth declined in recent months as private consumption slowed, even as monetary policy became more accommodative. In the third quarter, the economic growth figure fell by an annual pace of 2.6%, below the previous quarter's decline of 1.59%. Recent declines in economic growth came as overall growth was only barely above 0%, now falling into contraction, as is seen in the chart below. Both weakness in private demand and consumption contributed to an overall slowdown in economic growth.

"Private demand declined 0.9 percent subtracting 0.7 percentage point from the growth. Private consumption, which accounts for about 60 percent of the economy, rose only 0.4 percent. Housing investment