The US dollar just blew through the ¥100 level, meaning one Japanese yen is now worth less than a penny.
That's a key psychological level for what has become the most consensus currency trade in the world. The dollar hasn't traded north of ¥100 since April 14, 2009.
A strong yen in recent years has kept the economy in a prolonged struggle with deflation (falling consumer prices).
However, the new Japanese government that was established in late 2012 has brought forceful change to monetary and fiscal policies in order to weaken the currency in hopes that a lower yen will help the country lift itself out of a deflationary state.
The policies have been dubbed "Abenomics," named for new Japanese Prime Minister Shinzo Abe.
Here's a quick overview of the new policies:
- The Bank of Japan raised its inflation target to 2% from 1% and announced an open-ended bond buying program, unprecedented in size.
- The government increased its five-year public works spending program to $260 billion from $200 billion.
- The government is also putting together a package of structural reforms designed to promote innovation and employment while making Japanese industry more competitive.
That's a brief summary of the three-pronged approach Japan is taking to fight deflation, which is causing hedge funds to come out in size with their bets against the yen, sending the currency tumbling.
More from our partner, Business Insider:
Business Insider: Politico is going to test a paywall
Business Insider: Bloomberg editor flies to Prague to yell at two employees
Business Insider: John McCain's cable-destroying legislation