Japan Exchange Rate Is Cheaper Than 99% of Time
- Inflation-adjusted broad exchange rate has fallen to new lows
- USD/JPY hasn’t moved in line with fundamentals of late
Photographer: SeongJoon Cho/Bloomberg
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The yen was supposed to have comeback to life this year. As of now, that hasn’t happened, and from the looks of it, it may not spring back after Friday’s Bank of Japan policy review either.
The currency has a lot going for it. For starters, it’s unbelievably cheap. Japan’s broad real-effective exchange rate is 2.3 standard deviations below the average based on values going back a decade, an exclusive — if notorious — club that 98.8% of the time no entrant would really want to be a part of.