Yen’s Purchasing Power Eroding to Record Low: Chart of the Day
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The yen’s purchasing power is eroding to an unprecedented level with Japan’s trade deficit poised to increase from the widest on record, according to Mitsubishi UFJ Morgan Stanley Securities Co.
The CHART OF THE DAY shows the Bank of Japan’s calculation of the yen’s real effective exchange rate against 59 trading peers fell last month to the weakest since 1982, as the nation posted an unprecedented 26th-straight month of trade shortfalls in August. Historically, a weaker currency boosted exports and squeezed imports, though that hasn’t happened this time, indicating a “structural shift” has taken place, said Daisaku Ueno, the brokerage’s Tokyo-based chief currency strategist.