Exchange traded funds tracking the Japanese yen/U.S. dollar exchange rate have been hammered lately on currency interventions by Japan’s central bank and easing tensions over Europe’s crisis, which is lowering demand for safe havens.

The Japanese yen was one of the worst performing currencies last week after the Bank of Japan decided to buy more bonds to help push the currency down. Yen-focused exchange traded funds such as the CurrencyShares Japanese Yen Trust (NYSEArca: FXY) are under pressure.

“Most (including us) acknowledge that these latest BOJ announcements were radical and a first step towards debt monetization. In the near term this is an important negative development for the currency,” wrote analysts at JP Morgan, WSJ.com reports. [Japan ETFs Rise to Start Year]

The weaker currency is part of a strategy that the bank is using to revive the waning economy in Japan. The yen had strengthened over the past few months making Japanese exports more expensive on global markets. Furthermore, the Japanese economy is still trying to recoup losses after the March earthquake and tsunami disaster. [Can Japan ETFs Overcome Hurdles in 2012?]

Last month, Japan also reported a growing trade deficit. Officials reported it at 1.48 trillion yen, or $19 billion, due to a 9.3% fall in exports, and a 9.8%increase in imports, reports Daniel James Hayden for Benzinga. Weaker demand from countries such as Europe and China are hurting the deficit further. The addition of a stronger yen last month was having a negative impact upon the economy, creating the need for intervention. [Japan ETF Down 18% This Year]

Along with the U.S. dollar,the Japanese yen is considered a safe haven currency and any decline in the yen could trigger an upward trend for the U.S. dollar.

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