Why is the Japanese Yen almost worthless in comparison to the dollar, even though Japan is the3rd largest global economy?

Question

Why is the Japanese Yen almost worthless in comparison to the dollar, even though Japan is the3rd largest global economy?

In: Economics

Answer 1

The relative value of currency isn’t actually that good a metric of its worth. It tends to correlate because of you have a ton of inflation, as you often see in failing economies, then your exchange rate gets really high. But the Yen, from what I recall, is pretty close to being the US cent. So a $3 thing might be 300 Yen, but a $10/hour wage would be 1,000 Yen, say. So it all works out about the same.