Dominique Strauss-Kahn, the head of the International Monetary Fund, has warned global currency disputes are a "real threat" to the economic recovery.
The Japanese yen hit a new 15-year high against the US dollar today as prime minister Naoto Kan hinted at further currency intervention.
Global markets have rallied on the back of Japan's cut in interest rates, with the FTSE and Dow both up over one percentage point.
The Bank of Japan has cut interest rates to virtually zero in an effort to revive the ailing economy.
Eclectica founder Hugh Hendry has initiated a substantial short position in Japanese credit, on expectations of a sharp correction in the Chinese growth story.
Japan's central bank is believed to have intervened for the second time in a week to combat the rising yen.