Revision in the treatment of foreign exchange rate movement in Compiling the WPI and the IOPI, and in the publication form of "Ten-day index of the WPI" 1
- "Ten-day index of the WPI" and the IOPI are published only in Japanese.
January 12, 2000
Bank of Japan
Research and Statistics Department
For the Wholesale Price Index (WPI) and the Input-Output Price Index (IOPI), BOJ will change the treatment of foreign exchange rate movement in converting the "contract currency basis" index to the "yen basis" index from the January 2000 figures, which are scheduled to be released in February 20002 ("Example" in the Appendix illustrates the effect of the change on indexes). This was originally announced on December 7, 1999 together with the revision of the Corporate Service Price Index (CSPI), but we would like to explain it once again for confirmation3. For January 2000, indexes under the old treatment and their monthly and annual changes will also be released, which give information regarding the difference between the old and new indexes4.
Details of the change are as follows.
- When no transactions are made for a certain price datum contracted in foreign currency during a certain survey period, the "contract currency basis" index will remain unchanged.
- Upon conversion of the "contract currency basis" index to the "yen basis" index, the foreign exchange rate is also unchanged (The exchange rate at the time of the last contract will be used for conversion).
- Hence, the "yen basis" index also remains unchanged.
- No change is made for "contract currency basis" index.
- Upon conversion of the "contract currency basis" index to the "yen basis" index, foreign exchange rate of the survey period will be used.
- Hence, even if the "contract currency basis" index is unchanged, the "yen basis" index will fluctuate, reflecting the foreign exchange rate movement during the survey period.
As for the "Ten-day index of the WPI", the publication form will be revised5, together with the change explained above from first ten-day indexes of February 2000, which is scheduled to be released on February 18, 2000.
The effect of the change in treatment of foreign exchange rate
(1) Movement of the "yen basis" index from January to April
- Old treatment :
- In April, when a contract is made for the first time in three months, changes of the "contract currency basis" index and of foreign exchange rate between January and April are reflected on the monthly change of the "yen basis" index.
- New treatment :
- The "yen basis" index fluctuates every month, reflecting the monthly foreign exchange rate movement.
(2) Movement of the "yen basis" index from April to July
- Old treatment :
- Monthly change in July is negative, reflecting the stronger yen in comparison with the rate in April.
- New treatment :
- Monthly change in July is positive, reflecting the weaker yen in comparison with June.
- 2The WPI will be released on Feb 10, and the IOPI will be released on Feb 16.
- 3As for the CSPI, the same change has already been accomplished upon the revision from the 1990 to the 1995 base.
- 4For example, as for the WPI, the indexes for "all commodities" and "group"s of the Export Price Index (EPI) and Import Price Index (IPI) will be released using the old treatment. Their monthly and annual changes will be released, too.
- 5Only the indexes for "group"s whose items are actually surveyed each ten-day will be published and the indexes of other "group"s and "all commodities" will be abolished.