Strategist Creates Katsu Curry Index to Measure Yen Undervaluation

Geoff Yu, a senior strategist at Bank of New York Mellon, created the Katsu Curry Index to track the purchasing power of the Japanese yen. Using menu prices from the curry-rice chain CoCo Ichibanya, the index indicates the yen is significantly undervalued compared to current market rates.

While the market rate stood at approximately 159.23 yen to the dollar on Wednesday morning, Yu's calculations suggest a purchasing power parity rate of 62.18 yen. This figure indicates a steeper undervaluation than the Big Mac Index, which suggests a rate of 80.30 yen.

The index follows a major intervention by Japanese and United States authorities intended to prevent the currency from reaching a four-decade low. Yu suggests that if the cost of staples like katsu curry becomes prohibitive for residents, it may trigger growing demands for policy changes.