The yen has had a major spike up in the last few days, going from 107 to just over 103 in Tokyo trading today.
Note that moves of the yen are both the result of and the cause of market turmoil. When markets get nervous, traders cut back on yen-funded positions. They must buy yen to pay off the debt, which leads the yen to rise. Others using the carry trade, who may be happy with the risky (non-yen) side of their bet, may still wind up selling out their positions as they get hit on the funding side of the trade due to the yen appreciation.
Put more simply, a move of this magnitude is a sign of a major flight from risk by investment professionals.
From Bloomberg:
The dollar declined to a three-year low against the yen on speculation the Federal Reserve will signal plans to keep cutting interest rates to avert a recession.The currency broke below 103 yen for the first time since January 2005 and approached a record low against the euro before speeches by two Fed policy makers and an industry report that may show U.S. manufacturing contracted. The dollar fell last week against the euro by the most since December after Fed Chairman Ben S. Bernanke said some small banks may fail and unemployment will increase.
“Signs of more credit-market turmoil increase pressure on interest rates to fall,” said Greg Gibbs, currency strategist at ABN Amro Holding NV in Sydney. “Fed officials are likely to reiterate Bernanke’s dovish comments. These events pose downside risks for the dollar.”
The dollar fell to 102.93 yen, the lowest since Jan. 28, 2005, before trading at 103.10 at 11:35 a.m. in Tokyo, from 103.74 late in New York on Feb. 29…..
The yen gained against all 16 of the most-active currencies on speculation that losses linked to subprime mortgages will deepen, prompting investors to reduce holdings of higher- yielding assets financed from Japan…..
“Investors are shunning risky assets and are buying the yen non-stop,” said Seiichiro Muta, director of foreign exchange in Tokyo at UBS, the world’s second-largest currency trader. “Everything is bad as the subprime and monoline crisis doesn’t seem to be over and stocks may decline.”
Japan’s currency may strengthen to 156.00 per euro and 102.00 against the dollar today, Muta forecast.
Yves Smith 
Posts
I think we need a cat picture or a horse, maybe a dog?
The yen’s strength, which hurts Japan’s vital exporters by making their products more expensive abroad, has also helped push Japanese stocks lower. The benchmark Nikkei 225 index was down more than 4 percent Monday.