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YOKOSUKA NAVAL BASE, Japan — The yen jumped to a 15-year high against the dollar this week, reflecting fears on both sides of the Pacific Ocean that a strong economic recovery may take longer than anticipated.

The yen reached a high of 84.72 against the dollar Wednesday, though it weakened slightly to above 85 during afternoon trading in Tokyo on Thursday.

Consumers generally receive between one and three yen less per dollar at military and off-base banks, further increasing the effect of the exchange rate on them.

Just two months ago, a dollar bought 91.79 yen at commercial rates. A U.S. military family paying 200,000 yen ($2,360) per month for rent and utilities is now paying about $180 more than they did in June.

The military pays servicemembers a cost-of-living adjustment to make up for currency fluctuations; however, a decision on whether to change COLA is normally made every two weeks, which can impact servicemembers who make big off-base purchases in the interim.

In March, Morgan Stanley predicted the yen would weaken to about 109 per dollar by the end of the year, making a play on the currency one of its top trade recommendations. However, the brokerage firm’s belief that the Japanese government would intervene to weaken the yen has so far proven unfounded.

Japanese authorities haven’t intervened to manipulate the yen’s value since 2004.

Meanwhile, foreign money has surged into Japanese equity markets, further strengthening the yen.

Economists say fear of a double-dip recession is putting downward pressure on the dollar.

Japanese economists worry that a strong yen would endanger Japan’s economic recovery by tamping world demand for exports like cars and consumer electronics.

slavine@pstripes.osd.mil

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