The yen is set to suffer its worst year since 2005 as Japan battles with a soaring budget deficit, reports indicate.Data published by Bloomberg suggest that the country's economy will contract 5.7 per cent this year, making it the worst performer in the G10, which is expected to post a median average contraction of 2.5 per cent.Commenting on the country's rising debt problem, Richard Benson, who helps to oversee an $11 billion currency fund at Millennium Global Asset Management in London, lamented: "The Japanese fiscal situation is horrific. We went short the yen against the dollar and the euro about a month ago."Since that time, the company has adopted a more aggressive selling position on the yen after the cost of insuring its debt began to soar, he added.Figures show the price of hedging against losses on $10 million worth of Japanese bonds more than doubled to $76,160 a year, up from $37,000 in August.