For in recent weeks, the currency has seen arguably the most dramatic short-term rises for over a decade. After falling against the dollar to a low of almost Y127 earlier this month - a 50 per cent drop in two years - the yen surged back to touch the level of Y112 last week, before closing on Friday just below Y116.
The scale of this move has partly reflected market panic. During the last two years, many traders have practised so-called carry trades - borrowing yen at low interest rates and using it to buy dollars and other high-yielding currencies. This strategy depended on Japanese interest rates remaining at their current historically low levels of 0.5 per cent.
But in early May speculation erupted that Japanese rates might start to rise this summer, instead of next year as previously assumed. Most traders still think the possibility of an immediate rise in rates is slim. It seems unlikely the Bank of Japan will act until it has hard evidence about how the economy has reacted to the consumption tax rise in April - data not available until autumn.
As one government official said: The Bank of Japan is not going to take a potentially risky step like that without good information. But the possibility of a move has left traders scrambling to dump dollars. This pattern has fed on itself: whenever the US currency rallied briefly in the last three weeks, investors have been keen to sell it before they incurred further losses.
Japanese investors, in particular, appear to have been caught short.
As Pelham Smithers of ING Barings in Tokyo said: The hedging strategies of Japanese exporters are not as aggressive as they used to be.
Most thought the dollar would keep rising.
But the key question now is whether the dollars small rebound at the end of last week suggests that this panic selling is over - meaning that the US currencys slide is at an end. The Japanese government certainly appears to be hoping so.
The yens fall below Y125 earlier this month left many officials fearing new US trade complaints. And in the aftermath of the meeting of the Group of Seven main industrial nations at the end of April, efforts have been under way verbally to boost the currency.
But some officials are now uneasy that if the yen surges too far in the opposite direction it could hurt Japans exporters and damp the economic recovery. The finance ministry, for example, is officially stating that the period of yen weakness is now over.
Eisuke Sakakibara, the finance ministry official who oversees foreign exchange policy, said: What has happened in the last few weeks is that the irrational pessimism which pervaded the markets before has faded - traders have realised that the Japanese economy is not about to collapse. After the G7 meeting it took time for the markets to absorb the delicate little statements.
But whether this new stance will work is unclear. Jim ONeill, chief currency strategist at Goldman Sachs in London, for example, thinks the yen could soon be heading up again, as the widening trade surplus starts to irritate the US. Although Japans current account surplus as a proportion of gross domestic product fell to 1.4 per cent in fiscal 1996, from 3.1 per cent in 1993, it has been rising sharply in recent months.
The real thing to follow with respect to the yen, as it always is on a longer term basis, is developments in Japans current account balance, ONeill argues.
Other traders disagree: many economists in Tokyo now expect the currency to remain in the Y115-Y120 range for a while, since Japanese savers still appear intent on placing part of their money overseas, and the US growth outlook remains far stronger than the Japanese picture.
But the acid test may come if new signals appear about the direction of US interest rates - and when hard data finally emerge on what has happened to Japans economy after the tax increases. This should start to trickle out in the coming weeks.
