Through this whole crisis, the conventional wisdom has been that the yen was somewhat more insulated to the crisis than other currencies, due to the inherently low levels of leverage in the Japanese economy (courtesy of the 90s). Much of the price movement since then has been attributed to ex-Japan macro factors; the "safe haven" theory, Japanese repatriation due to fiscal year end, open market actions by BoJ, etc. There was some discussion of pain due to lower demand for exports but it hasn't been really explored in any great detail and typically been viewed as secondary to other factors, given the relative nature of FX.
It's important to look at the raw demand numbers to get a sense for what is really going on. BoJ released the industrial activity numbers last week for Jan 09. If we use the industrial activity numbers as a proxy for lagging demand indicators, the picture is much grimmer.
Below is the raw data for all industry activity (ex. agriculture, forestry and fisheries) and the three largest individual components for the all industry index. As expected, government services has been relatively stable, while industrial production has fallen off a cliff. Tertiary industry services has also moderately declined; while it is the largest individual component, it is frustratingly also not defined so it's up to our best guess. Industrial production is presumably driven by exports and domestic demand; to put it in perspective, the last point of comparison is the 2000/2001 bubble burst. The current crisis has killed demand by ~3x of the last recession in about a 1/3 of the time.
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