Japanese Yen Undervalued Against Dollar: Nordea

Nordea's Helge J. Pedersen argues that the Japanese Yen is significantly undervalued against the US Dollar, as per OECD purchasing power parity estimates and The Economist's Big Mac Index.

The Big Mac Index, which compares the prices of burgers across countries, shows that a Big Mac in Japan is now markedly cheaper than in China, measured in dollars. This suggests that the yen is undervalued against the dollar.

Pedersen notes that despite Japan's strong trade and current account surpluses, persistently low Japanese interest rates versus the US continue to weigh on JPY and limit sustained currency strength.