Japan Confronts Flight to Quality With Brutal Yen

Investors seek the yen as a haven from turmoil sparked by a debt crisis, sending it to a postwar high against the dollar and threatening to deepen Japan’s economic stagnation. The year: 1995.

It’s deja-vu for Japanese policy makers, who 17 years ago countered the surge in the yen with record intervention in the foreign-exchange market, driving it down by about 30 percent within five months. Like then, the currency is again trading at postwar highs, undermining Japan’s recovery from last year’s earthquake and tsunami as investors seek refuge from Europe.