Japan's new government has vowed to revive the economy and expectations for aggressive monetary easing are running high. This sets the scene for the yen, which has fallen sharply and quickly in recent weeks, to weaken to the 100-mark versus the dollar, possibly this year, some analysts say.
The yen, trading at about 87 per dollar, has shed about 11 percent since mid-November when Shinzo Abe, who became Japan's new prime minister following elections last month, promised a more aggressive monetary policy.
Keen to tackle the deflation that has dogged Japan's economy for years, Abe wants the cautious Bank of Japan to adopt a 2 percent inflation target – something the central bank is expected to consider when it meets later this month.
(Read More: Is the Bank of Japan Already Dancing to Abe's Tune?)
"Japan will be interesting to watch this year and it strikes me that they (policymakers) are finally serious about fighting deflation and stimulating growth," Richard Jerram, chief economist at Bank of Singapore told CNBC Asia's"Squawk Box" on Tuesday.
"The yen has fallen quickly and once it gets going, it gets going. What we're saying is what kind of number (in dollar/yen) do you need to fight deflation? I think we need to see dollar/yen at 110, 20 to say you're on top of the deflation problem," Jerram added.
Inflation in Japan fell 0.2 percent in November from a year earlier, after a 0.4 percent decline in October. A weak currency, brought about by aggressive monetary easing would help boost inflation, analysts say.
Japan's new government on Tuesday published a draft of an economic stimulus package, saying it wants to create a framework in which it can work closely with the Bank of Japan (BOJ) to bring an early end to deflation.