Investors are closely watching the ongoing Group of 20 Nations meeting in Washington to see if Japan comes under fire for following policies that have led to a sharp devaluation of its currency. But analysts say the yen should continue on its weakening path, regardless.
On Wednesday on the eve of the two-day meeting U.S. Treasury Secretary Jack Lew warned against the perils of "beggar thy neighbor" currency devaluations pointing to both China and Japan.
But Kumar Palghat, managing director at fixed income investment firm Kapstream Capital says: "I don't think you're going to get a lot of action from G-20. The yen (Exchange:JPY=) will get a lot weaker than we are today. Market expectations are somewhere around 100 to 110 [against the U.S. dollar] and I think that's right for Japan."
The yen was trading at 98.3 against the dollar in early trade on Friday.
Since Prime Minister Shinzo Abe first pledged to turnaround Japan's flagging economy through aggressive monetary policy in mid-November, investors have watched the yen weaken 24 percent against the dollar.
But his policies have been met with criticism from other countries as it gives Japanese exporters an edge over rivals like South Korea.
(Read More: Ssshh! Why Japan Is Keeping Quiet on the Yen )
However, most analysts expect the G-20 nations to take a lenient approach on Japan as the economy attempts to drag itself out of 15 years of deflation.
"They [G-20 participants] have made it quite well known that Japan has a free pass on this one. Everyone has come out and said that this is the right thing to do," Peter Whitley, senior forex analyst at Thomson Reuters told CNBC.
The yen has over the past week flirted with the psychological 100 per dollar level, then backed away, leading some commentators to call a top on the currency's weakening trend.
But Whitley said the yen is set to weaken past 100 per dollar as soon as next week, as no major developments are expected out of the G-20.
The official statement is yet to be released and while most analysts expect Japan to be let off the hook at the meeting, "currency wars" will be high on the agenda. Analysts say most of the real dialogue takes place behind the scenes at the G-20 and disapproving views will be voiced.
(Read More: US Keeps Up Pressure on G-20 Over Currencies )
"I think G-20 has been classified as a non-event, but that's the official G-20. Obviously behind the scenes is where all the action is. There will be a lot of niggling but it won't transpire into the real end of the market," added Whitley.
According to Palghat, while this time Japan might get let off, "in the future they [G-20] are going to say you have to try values determined by economic growth and fundamentals and you can't just use a 'beggar thy neighbor policy' to get your currency going."
(Read More: Is the Yen Going Into a Free-Fall? )
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