The yen's trajectory at the end of 2005 seems a bit like the dollar's trajectory at the end of 2004.   With the yen at 120, companies like Toyota presumably have little incentive to ramp up their US production; the dollar/ yen still matters.  But, as General Glut notes, right now the markets are not demanding global adjustment, for better or for worse.  The yen is falling, despite Japan's current account surplus; rising home values are encouraging American households to take on more debt to support their current consumption

One reason for yen weakness: it seems like Americans playing the Japanese stock market want to hedge -- lest a falling yen wipe out their gains on the Nikkei's rise -- while Japanese investors playing the US bond market currently find hedging a bit too expensive.