Katsu Curry Points to Yen Undervaluation, Contradicting Big Mac Index
Geoff Yu, chief strategist at BNY Mellon, has created an index to measure the yen's purchasing power using the price of Japanese pork cutlet curry. Dubbed the 'Katsu Curry Index', it mirrors The Economist's Big Mac Index, which compares burger prices across countries to assess currencies' purchasing power.
The Katsu Curry Index suggests that the yen is substantially undervalued relative to its purchasing power, with a fair value of 62.18 yen per dollar based on menu prices at Coco Ichibanya, the world's largest curry chain. This is in contrast to The Economist's Big Mac Index, which implied a fair value of 80.30 yen per dollar.
The recent weakness of the yen has raised concerns about its purchasing power, with Yu stating that 'if the goal is to bring purchasing power in line with high-income countries, this index shows the yen should be much stronger than it is now.'