Why is the dollar worth fewer and fewer Japanese yen?

Question:

I've really been thinking about visiting Japan or maybe moving there to teach English for a while, it's something I've wanted to do for years but never took the chance.

The exchange rate has changed so much from the mid 2000s though! Not long ago a dollar was worth 118 yen, and now it's worth 76. That means everything is a full 50% more expensive now! That's a huge change in a short time period!

I certainly understand that the US economy, and the dollar along with it, has weakened and it's normal to expect some change.

But ALL countries have been having economic problems, and Japan is no exception. They recently had their non-AAA credit rating downgraded further, and their national debt (as percentage of GDP) is the largest in the world, far bigger than the United States.

Plus they've had huge damage from earthquakes and floods this year which will just worsen their economic situation even further... it seems like a bad economic situation over there.

So then why is the yen doing so well as a currency compared to the other currencies of the world? Is it just deflation, or what?

I suppose I could look at it this way, if I do teach in Japan and save my money, my income will be equivalent to $41,000 USD rather than the $29,000 from years ago, even though it's the same amount of yen.

Answer:

US government (or we should say FRB) is printing a huge amount of USD in the last 1 or 2 years (google with QE2). So the relative value of USD is being diminished by that policy.

On the other hand, Japanese government or Bank of J does not try to print yen at all. (Japanese people wonder why, because some people think that it's time for Japan to print more yen). So Japanese economy is in deflation and its exchange rate does not go down at all.
http://en.wikipedia.org/wiki/QE2_%28mone…