Yen's Effective Rate Falls to Lowest Level since 1970
Tokyo, Oct. 23 (Jiji Press)--The yen's real effective exchange rate has dropped to the lowest level since September 1970, when the Japanese currency was pegged at 360 per dollar under the Bretton Woods monetary system.
The fall in the yen's real effective exchange rate, which shows the currency's external competitiveness, reflects slower inflation in Japan than in other nations brought on by sluggish growth in the Japanese economy.
The drop means a decrease in the country's external purchasing power. The yen's decline is negatively affecting households and companies in Japan through soaring prices of imports including food and crude oil.
According to data released by the Bank for International Settlements on Wednesday, the yen's real effective exchange rate as of last month came to 57.95 against 100 for the year of 2010, down 60 pct from its peak in 1995.
The rate hit the lowest level since 57.64 recorded in September 1970, which was before the so-called Nixon shock, or the abrupt announcement in 1971 by then U.S. President Richard Nixon to stop the convertibility of the dollar to gold.
[Copyright The Jiji Press, Ltd.]