Yen's Real Strength Lowest in 50 Years

Economy

Tokyo, Feb. 18 (Jiji Press)--The yen's real strength representing the Japanese economy's external purchasing power has tumbled to its lowest level in 50 years, data from the Bank for International Settlements have shown.

The yen's real effective exchange rate as of January stood at 67.55 against 100 for the base year of 2010, the lowest since 67.49 in June 1972, according to the data, released Thursday.

The weakening of the yen's external power would lead to higher import costs for Japan, possibly working negatively for the economy of the country, which depends on imports for a large part of natural resources it needs.

The real effective exchange rate, the weighted average of a basket of currencies, measures the comprehensive strength of a currency, unlike exchange rates between two specific currencies. The Basel, Switzerland-based BIS calculated the rate by taking into account exchange rates, trade volume and price developments in about 60 countries and regions.

The yen's real effective exchange rate peaked in April 1995, at 150.85, according to the BIS. Since then, the rate has fallen by more than 50 pct, reflecting the perceived tendency of the Japanese government and the Bank of Japan to favor a weaker yen and due to prices and wages remaining relatively low in Japan than in other countries and regions.

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Jiji Press