While the exchange rate of the yen against the US dollar fell to a low point in the media in 40 years, a broader indicator measuring the strength of the yen also sent an equally worrying signal to Japan. The Bank of Japan's Nominal Effective Exchange Rate Index — an index that measures the yen against a basket of trade-weighted currencies — has fallen to a record low this year, reflecting the general weakness of the yen against the euro, the pound, and several major Asian currencies. The depreciation of the yen highlights that its weak performance is far more than against the US dollar, which also heightens investors' concerns about imported inflation and Japan's declining purchasing power. The weakening of the trade-weighted yen has boosted the cost of importing products from more trading partner countries, complicating the Bank of Japan's efforts to normalize monetary policy without harming economic recovery.

While the exchange rate of the yen against the US dollar fell to a low point in the media in 40 years, a broader indicator measuring the strength of the yen also sent an equally worrying signal to Japan. The Bank of Japan's Nominal Effective Exchange Rate Index — an index that measures the yen against a basket of trade-weighted currencies — has fallen to a record low this year, reflecting the general weakness of the yen against the euro, the pound, and several major Asian currencies. The depreciation of the yen highlights that its weak performance is far more than against the US dollar, which also heightens investors' concerns about imported inflation and Japan's declining purchasing power. The weakening of the trade-weighted yen has boosted the cost of importing products from more trading partner countries, complicating the Bank of Japan's efforts to normalize monetary policy without harming economic recovery.