The billion-yen question on many investors’ lips right now: where does the Japanese currency go from here? Consensus says the yen will weaken further against the US dollar, thus helping an exporter-heavy stock market. Expectations were tempered a tad on Tuesday when the Bank of Japan declined to give prime minister Shinzo Abe’s 2 per cent inflation target immediate support. Then again, Mr Abe seems bent on monetary easing to boost the economy, and a new central bank governor will be appointed in April.

The case against the yen goes as follows. Japan has suffered as a haven in the global competition to devalue national currencies. But that period has run its course as Japan joins the fray with talk of its own easing. An actual inflation target would be a huge change in policy. Meanwhile, an improving US economy and some respite in Europe are stoking an appetite for risk. Concern is also growing over whether domestic institutions can keep absorbing Japanese government debt indefinitely.

But investors must remember that counter arguments to the weak yen story are far from flimsy. First, it is easy to imagine the global recovery petering out. Second, Japanese industry may not be suffering as much as feared. On a trade-weighted basis in real terms the yen is still one-fifth weaker than a decade ago. Over the same period and on a real basis it has also been the weakest currency across Asia – where inflation has increased well over a tenth while Japan has faced deflation.