Could currency wars make a comeback in 2014?
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Verbal intervention from Japan's neighbors this week may have contributed to the bounce in the Japanese currency against the won, yuan and U.S. dollar on Friday. The yen traded at about 104.36 to the greenback, off this week's five-year low around 105.44.
In early 2013, talk of currency wars, triggered in part by the yen's sharp fall, dominated currency markets. That was before another big theme of 2014 emerged - talk of an unwinding of U.S. monetary stimulus.
'It's really the yen crosses that we'll see a lot of the big moves in this year,' Michael Woolfolk, managing director and senior currency strategist at BNY Mellon in New York told CNBC Asia's ' Squawk Box.'
'It should put a lot of pressure on the emerging Asian currencies. We think they will push back, that there will be an escalation of currency wars and intervention is the most likely route,' he added.
The yen declined almost 22 percent against the dollar last year against a backdrop of aggressive monetary easing by the Bank of Japan and broad strength in the U.S. currency on talk of Fed tapering. It was the worst performing major currency of 2013.
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'The yen/won movements have not hit exporters significantly, but it does look like they [the South Korean authorities] are taking a pre-emptive approach so the noises they've made this week are not unusual,' said Mizuho Corporate Bank Market Economist Vishnu Varathan.
'We're not looking at exceptionally strong currencies across emerging markets, so I think it will be just the export-focused north Asia that continue to make noise about their strong currencies,' he added.
- By CNBC.Com's Dhara Ranasinghe; Follow her on Twitter
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