CNY vs JPY: An ugly currency war Saxo Bank CIO and Chief Economist Steen Jakobsen is watching the yen versus the yuan. He says that we are seeing an extremely weak Yen and an extremely strong Yuan. China's two main export competitors are Korea and Japan, so Steen sees two deflationary exporters in a currency war: I believe there is an increased risk we'll see a significant paradigm shift from authorities in China who so far have accepted the currency has strengthened with the dollar. Why is this happening now? Steen says China is losing momentum as the world is missing the US currency account deficit, which has fallen from $450 billion to $250 billion, meaning the world has effectively lost an export market of $200 billion. Steen believes China needs to play with its currency to maintain its export share, and relying on increasing domestic demand will not be enough. (VIEW LINK)