ALL THE tables for a champagne afternoon - yes, afternoon - at a top Tokyo hotel were sold out to satisfied-looking middle-aged patrons. The bars in the financial district were abuzz with a youthful after-work crowd. Animal spirits seemed back in the air last week.

It is all down to "Abenomics" - the word for Japan's bold experiment with the "first arrow" (cheap money through quantitative easing, or QE), the "second arrow" (fiscal spending to boost the economy) and the "third arrow" (a restructured and revitalised Japan Inc).

On the face of it, Shinzo Abe, the prime minister, is an unlikely risk-taker. Scion of an elite political family that is conservative to the core, Abe, 58, is the Japanese establishment personified. His first term as premier ended prematurely in illness, indecision and ignominy.

But to general surprise, he has returned as a nationalist on a mission to end Japan's era of deflation and decline. He will come to the G8 meeting in Northern Ireland heralded as the most significant Japanese leader in a decade, and one whose policies hold deep implications for the global economy.

On his watch, Japan has ditched its traditional central bank doctrine and dumped its austere central banker in favour of a new governor, Haruhiko Kuroda, who has ordered a vast expansion of the money supply, following America's Federal Reserve and the Bank of England.

Long a nest of vigilant anti-inflation hawks, the central bank is now explicitly aiming at an inflation target of 2% and a nominal GDP growth rate of 3%.

Clear out the bureaucrats, the vested interests and the politicians that have choked our economy for too long"The Bank of Japan has decided to step further into uncharted territory of monetary policy," admitted Ryuzo Miyao, a member of the BoJ policy board. The minutes of the bank's meeting on April 26 show that the board's members were split on whether QE would work.

Meanwhile, the central bank has watched the yen slide steadily from 79 to the dollar to about 100, restoring competitiveness for Japanese exporters and handily increasing the price of imported food and goods.

David Fuller's view In an uncertain world, I maintain that Japan remains one of the most interesting and promising market plays. However, it will often be volatile, as we have already seen.

The Japanese yen has strengthened against the US dollar today, shown inversely as USD/JPY (monthly, weekly & daily). Unless the BoJ intervenes to push the yen back closer to ¥100 versus the dollar overnight, this could drag the Nikkei 225 (monthly, weekly & daily) somewhat closer to its rising 200-day moving average. Moreover, a global stock market corrective phase remains underway.

Personally, I favour buying Japan on weakness for its medium to longer-term upside potential.