Take a look at the divergence between Korea’s Kospi and Japan’s Nikkei over the past month. Clearly the result of Shinzo Abe’s policy to weaken the yen.
Recall how the last big dollar/yen reversal in 1995 helped set the stage for the 1997 Asian Financial Crisis,
…just before the Asian financial crisis broke out, the dollar rose considerably; versus the Japanese yen the dollar’s rise was close to 50 percent.
Doubt we see that again as those countries are not committed to a dollar peg as they were in the 1990’s. However, if the aggressive currency policy of Japan’s new government results in continued repricing of the yen, which we expect, economic tensions will only increase.
Still, even after a 30 percent apprecitation since early June, the Won/Yen cross remains well below 10.8, the 5-year high made in August 2008.
(click here if charts are not observable)