China’s central bank feels the heat from falling Japanese yen

If the job of China’s central-bank chief was just to keep an stock-market bull run going, he should be getting top marks, as last week the Shanghai Composite Index SHCOMP, +0.90%  burst through the 5,000-point level for the first time since 2008.

But People’s Bank of China (PBOC) Gov. Zhou Xiaochuan also has to worry about managing scary debt levels and falling prices, even if he can ignore the growing disconnect between the economy and equities. This might explain why Zhou has recently repeated warnings about rising deflation threats.

Likewise, big moves in the currency markets — where last week, the dollar USDJPY, -0.10%  hit a 13-year-high against the yen at ¥125.72 — should be getting his attention.

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