Watch VideoPlay Video
Japanese yen rose on Wednesday towards 15 year highs, and benchmark government bond yields slipped under 1 percent. That raised concerns about the efforts of policy makers to combat deflation, and keep the Japanese economic recovery on course.
The strength of the yen could undermine the export industry that has led the economy out of the global downturn, and add to deflationary pressures following 16 straight months of falling consumer prices.
Still, the yen's rise and a fall in 10-year government bond yields below 1 percent largely reflects factors beyond Tokyo's control, complicating the issue for policymakers.
Economists say long-term Japanese government bond yields have started factoring in an economic slowdown, on the back of worries about the US economy.