From shadow shogun to sawn-off shogun; Naoto Kan has seen off the leadership challenge of Ichiro Ozawa. But when it comes to problem number two – the dollar/yen rate, still testing new 15-year highs – the Japanese prime minister remains practically powerless.

The traditional solution – intervention – is unlikely. For one, Japan would almost certainly have to go it alone, given that other G7 members have made such a fuss about keeping exchange rates free-floating. Even if it was attempted, intervention couldn’t be guaranteed to work. Fourteen months of yen selling, between January 2003 and March 2004, did no more than slow the pace of yen gains. The currency didn’t reverse course until late 2004, when the gap between real US and Japanese interest rates started to favour the dollar.

Further, much of the current upward pressure on the yen is coming from repatriation by Japan’s investors themselves. Net sales by Japanese investors of portfolio investments abroad in the first seven months were Y5,526bn, more than double the net purchases of Japanese assets by foreigners.