The yen's real effective exchange rate hit a fresh all-time low of 68.65 in May, the Bank for International Settlements said Thursday, reflecting the currency's persistent weakness against its counterparts and the relative decline of Japan's competitiveness.
The fall in the yen's purchasing power came as inflation and wage growth in Japan is still slower than in the United States and other nations. The currency's depreciation has become a headache for policymakers as resource-poor Japan struggles to cope with higher import costs magnified by the feeble currency.
The BIS data, against 100 for the base year of 2020, measures the yen's strength against other currencies by taking into account economic indicators. The corresponding figures were 109.58 for the U.S. dollar, 102.11 for the euro and 91.12 for the Chinese yuan.
Japanese authorities have stepped into the foreign exchange market to shore up the yen in recent months, alarmed by its rapid drop, particularly against the dollar. The wide interest rate gap between Japan and the United States remains a major factor behind its weakness.
