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BNY strategist’s Katsu Curry Index gauges yen weakness after intervention
The index compares what a US dollar buys in Japan versus implied purchasing power, showing one dollar should fetch 62.2 yen on curry pricing versus 159.2 yen in spot FX.
Bank of New York Mellon strategist Geoff Yu is using a Japanese katsu curry price benchmark to illustrate how weak the yen has become as the effects of recent currency intervention fade, according to LiveMint Markets.
Yu created the Katsu Curry Index as an alternative to the Big Mac Index, arguing that comparing pork-and-rice curry pricing captures yen purchasing power more accurately than burger prices. Using CoCo Ichibanya menu data, the strategist calculates that one dollar buys about 159.2 yen in the FX market, but only about 62.2 yen when adjusted for purchasing power based on curry dishes.
By comparison, the Big Mac Index implies the dollar should buy about 80.3 yen, meaning curry-based pricing suggests the foreign exchange market is significantly undervaluing the yen. Yu, speaking as the yen remains a focal point after Japanese and US authorities intervened in the FX market to pull the currency back from multi-decade lows, said the yen would need to be much stronger to align purchasing power with high-income countries.
LiveMint Markets notes that a weaker yen has raised costs for overseas travel and foreign goods, while also contributing to higher prices for meals, services, and consumer products in Japan. Yu added that if everyday dishes become too expensive domestically, it could increase calls for policy changes, and he cited similar concepts like the Tall Latte and KFC indexes that aim to better reflect purchasing power parity in different markets.