Ben Bernanke sneezed and the Japanese caught cold.
"Tapering," the Fed chairman's signal to the markets that the central bank would be ever so gentle when it withdrew quantitative easing, was read by traders as the dawn of a new tightening regime. Hedge funds promptly covered their short positions in the yen, and domestic Japanese investors covered theirs. The yen gave up 10 hard-fought, big figures of decline, and Japanese equities dropped by 20%. Pity the Japanese central bankers who thought they were the masters of their own destiny.
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