The yen’s dramatic plunge

The yen has fallen to levels Japan has rarely seen. The yen-dollar exchange rate exceeded 163 yen per dollar in late July, the first time it had reached that figure since December 1986.

The exchange rate has reached the 160 range only twice before, in 1990 and 2024. On those occasions, it stayed there for less than two weeks. This time, it has remained above 160 since mid-June, lasting about a month and a half.

The scale of the decline has prompted descriptions of a historic period of yen weakness. The Big Mac Index, commonly used to compare prices and currencies across countries, suggests the yen is undervalued by 50.4% against the dollar.

The weaker currency is also feeding into Japan’s domestic prices. Imported goods cost more, pushing up the prices of products sold in Japan. More than 4,000 food and beverage items are expected to rise in price this month, while the number of items facing price increases during the year is expected to exceed 20,000.

The article links public frustration over surging prices to a record-low approval rating for Japanese Prime Minister Sanae Takaichi, though the provided text does not give the rating figure.