The yen’s slump to a five-year low against the dollar this week has seized the attention of financial markets, and the dramatic headlines didn’t even capture the full extent of its weakness.
The currency also slid to a record low based on a JPMorgan Chase & Co. index that measures it against those of Japan’s major trading partners and is adjusted for inflation. The decline in the so-called real effective exchange rate has been driven by the yen’s falling nominal exchange rates, and the fact inflation is slower in Japan than in most other economies.
