New index underscores yen’s weakness

A senior strategist at Bank of New York Mellon (BNY) has introduced a new gauge of the Japanese currency, dubbed the “Katsu Curry Index,” to assess how weak the yen is in real-world terms. The index is based on international price comparisons for a popular pork-and-rice dish sold by CoCo Ichibanya, a curry-rice chain with around 1,500 outlets worldwide.

By comparing menu prices across countries, the strategist calculated a purchasing-power fair value of 62.18 yen per US dollar. This level is far stronger than the prevailing exchange rate, suggesting that, on a purchasing-power basis, the yen is significantly undervalued against the dollar.

The Katsu Curry Index has been presented as an alternative to more established burger-based gauges of currency valuation. Its focus on a Japanese fast-food staple is intended to capture how currency moves translate into everyday costs within Japan.

While the Katsu Curry Index points to a fair value of 62.18, actual trading in global foreign-exchange markets has the dollar buying far more yen. On the morning the index was discussed, the dollar traded at about 159.23 yen, illustrating the wide gap between purchasing-power estimates and market pricing.

In a separate trading session, the yen fell as much as 0.1% to touch 159.39 per dollar before ending the session little changed. The move kept the currency close to levels that many market participants view as important markers for potential policy action.

The approach toward the 160-per-dollar level has raised fresh questions over whether Japanese authorities might step in again to support the currency. In the past, yen weakness has been contained around that area, and recent moves have revived debate about the likelihood and timing of any renewed intervention.

The yen has already surrendered roughly half of the gains made after a recent joint US-Japan intervention. This erosion of earlier strength, combined with purchasing-power measures that show substantial undervaluation, keeps attention on official responses and on the tension between market dynamics and underlying price-based indicators.

The discrepancy between the Katsu Curry Index’s fair value and the spot exchange rate underscores how far market levels can diverge from purchasing-power benchmarks. Even as the index suggests the yen would need to be much stronger to align domestic prices with those in high-income countries, the currency remains weak in trading.

This contrast between theoretical fair value and actual market pricing is shaping discussions among traders and strategists. With the dollar trading near 159–160 yen and earlier intervention effects fading, the Katsu Curry Index has added a new lens through which to view the currency’s weakness and the policy choices facing Japanese authorities.