Geoff Yu, chief strategist at BNY Mellon, has launched the Katsu Curry Index to measure yen valuation against the dollar, finding the currency trading at 159 per dollar versus a fair value of 62.18 based on menu prices at Coco Ichibanya, a major Japanese curry chain.
The index tracks the cost of a katsu curry dish across Coco Ichibanya locations in Japan and the United States, applying the Big Mac Index methodology to measure purchasing power parity. At current exchange rates, the same meal costs significantly less in yen-denominated Japan than it does in dollar terms when converted at spot rates.
The analysis uses menu pricing data from the restaurant chain to derive an implied exchange rate, following the framework popularized by The Economist's Big Mac Index, which has tracked currency valuations through McDonald's burger prices since 1986. The Katsu Curry Index applies the same principle to a dish more representative of Japanese consumption patterns than beef sandwiches.
Japan's currency has weakened against the dollar over the past two years, driven by interest rate differentials favoring dollar-denominated assets and outflows from Japanese investors. The yen's weakness at 159 per dollar represents levels last seen in the early 1990s on a nominal basis.
Purchasing power parity calculations offer one frame for currency valuation but do not account for capital flows, risk appetite, or monetary policy divergence. The Katsu Curry Index reading of 62.18 as fair value implies the yen would need to strengthen by 61 percent to reach parity with the basket of goods represented in the index. That gap exceeds typical historical ranges for major currency pairs and reflects the scale of recent yen depreciation.
The index joins a growing set of informal valuation tools used by strategists to communicate currency positioning. Yu's Katsu Curry Index trades on the recognizable Big Mac Index format while anchoring the analysis to Japanese price data rather than global fast-food benchmarks. Whether policy action or shifting capital flows narrow the disconnect between spot rates and purchasing power parity metrics will determine whether the yen move persists or reverses.
The test is whether the Bank of Japan alters its yield curve control settings or announces tighter policy in coming months, which would narrow the interest rate advantage holding the dollar strong against the yen.
