The sick Yen

According to The Economist, which cites a modelling exercise by Morgan Stanley, the Japanese Yen is 12% undervalued against the US$ and 30% undervalued against the Euro. In comparison, The Chinese Yuan is only 7% undervalued against the US$.

A weak Yen coupled consistent deflation (i.e. falling prices) in the country means that the real trade-weighted value of the Yen has fallen to its lowest since 1982.

The article lists a number of theories which purport to explain why the Yen is so sick, including "interest rate differential", "carry trade" and "global funnelling hypothesis".

All these are a bit too hard for me to digest.

I don't really care why the Yen is weak. All I want is further weakness, at least until the end of this year, since I shall be travelling around Japan for 2 weeks in late November, early December.

Already, it costs less to buy a Big Mac in Japan than anywhere else in the developed world - not that I am desperate to chew Big Macs whilst in Japan, though.