Yen's True Value Revealed in Tasty Tonkatsu Curry Index

The Japanese yen has been undervalued by more than initially thought, according to an analysis that compares its value to the local price of tonkatsu curry at CoCoICHI restaurants.

Bloomberg reported on December 12th that Jeffrey Yu, a senior strategist at Bank of New York Mellon, created this index as an alternative to the Big Mac Index. The Big Mac Index suggests a fair value of 80.3 yen per dollar, but the tonkatsu curry index shows a fair value of around 62.18 yen per dollar.

The foreign exchange market currently values the yen at around 159 yen per dollar, significantly lower than its actual worth. This discrepancy is partly due to the interest rate gap between the US and Japan, which has led to a resumed carry trade driven by borrowing funds in low-interest currencies to invest in high-yield assets.

Jasper Cole, a senior executive at Monex Group, stated that 'intervention merely scared the market; it could not stop the financial law of money flowing in pursuit of maximum returns.'