The U.S. dollar has fallen in value against the Japanese Yen.  This is because Japanese government and corporations are cashing in their chips. They are cashing in the foreign bonds they hold, in order to raise cash to help deal with the disasters. Corporations, including insurance companies which expect pay out huge claims, are trying to acquire as much Japanese Yen as they can. This is called “repatriation” in the financial markets.

The Bank of Japan will take advantage of the rising value of the Yen, by selling Yen to foreign buyers in order to bring in foreign cash to the national bank.

Japan has been one of the most prolific buyers of U.S. debt, in the form of U.S. bonds.  Japan itself is in huge debt, but until now was able to continue buying U.S. bonds, helping the U.S. government.  The disasters have forced Japan to sell back bonds in order to raise cash to help deal with ongoing crisis, and for rebuilding.  Japanese corporations have to raise cash due to the fact that most factories have shut down, which means they’re not making anything to sell.  So Japanese corporations have to sell the foreign bonds they hold.

This is the beginning of a possible economic dominoes affect on the World Economy.