JEREMY HOBSON: As the world watches military helicopters dump seawater on the troubled nuclear plant in Japan to cool reactors and avoid a meltdown, economists are watching the Japanese currency, the Yen. It’s hit its highest level against the U.S. dollar since World War Two.

Let’s continue our coverage of the human and economic disaster in Japan now with Marketplace’s Stephen Beard. He’s with us live from London. Hi Stephen.

STEPHEN BEARD: Hello Jeremy.

HOBSON: First of all it seems like the yen would be falling right now, given all the turmoil in Japan. Why is it rising?

BEARD: Well, analysts say what’s happening here is that Japanese insurance companies are bring their foreign investments home because they face insurance claims running into the tens of billions. They’re selling their investments in the U.S. and in Europe and bringing the cash home. Converting that money in to yen is what’s pushing up the Japanese currency they say. But, the Japanese government says no, the yen is rising because of speculators.

HOBSON: Well, either way Stephen — a good thing or a bad thing for Japan to having a rising yen right now?

BEARD: In short term, it’s not that bad because it means Japan will be able to buy more more the foreign supplies it urgently needs to import. Longer term — it’s bad because an expensive yen makes Japanese exports more expensive.

HOBSON: And what about the affect on the United States economy?

BEARD: Well, there’s a long term worry here. If we are seeing the Japanese taking their money home since the U.S. imp articular has been relying on that money to pay for a big chuck of its government spending. This flight of Japanese money back to Japan could be bad for the U.S.

Here’s Steen Jakobsen of Saxo Bank.

STEEN JAKOBSEN: It will leave a hole in the global recycling of capital. You can say that Japan and China has been paying for the deficit of the U.S. and of Europe. And if they stop recycling capital in this market, it leaves an empty hole which needs to be filled.

And how do you fill that empty hole? By pushing up U.S. interest rates and by cutting U.S. government spending quite sharply and all that would hit American growth.

HOBSON: Marketplace’s Stephen Beard in London, thanks Stephen.

BEARD: OK Jeremy.