The rupee-trends piece on this site covered INR against USD, CNY, RUB, SAR and AED — five currencies chosen because they anchor India's largest trade relationships. It left out the yen, even though a separate piece on this site built its entire cross-border financing argument around Japan being the cheapest place to borrow. This piece closes that gap: INR/JPY over ten years, and what it turns out to explain about why yen debt was such a good trade.
The Currency the Rupee-Trends Piece Left Out: What INR/JPY Actually Looks Like
Adding JPY to the same 10-year, indexed-to-100 methodology used for USD/CNY/RUB/SAR/AED produces the most visually distinct line on the whole chart — and not because the yen is more volatile. It's the only one that spends real time below 100.
Source: derived from Yahoo Finance daily closes (JPYINR=X), 15 Aug 2016–14 Aug 2026, joined to the same USD/CNY/RUB/SAR/AED series used in "Where the Rupee Actually Stands." All six series use identical indexing methodology.
| Pair | Rate, 14 Aug 2026 | 1-year | 3-year | 5-year | 10-year | 2026 YTD | Ann. vol., % |
|---|---|---|---|---|---|---|---|
| USD/INR | ₹95.39 | +8.9% | +14.9% | +26.7% | +48.0% | +6.0% | 6.0 |
| CNY/INR | ₹14.15 | +15.5% | +24.0% | +21.0% | +44.8% | +10.0% | 7.0 |
| RUB/INR | ₹1.15 | +5.8% | +32.0% | +9.4% | +4.1% | +0.8% | 52.3 |
| SAR/INR | ₹25.41 | +8.7% | +14.6% | +26.5% | +47.7% | +5.8% | 9.6 |
| AED/INR | ₹25.97 | +8.8% | +14.9% | +26.7% | +48.0% | +6.0% | 6.0 |
| JPY/INR | ₹0.599 | +1.2% | +6.6% | −10.3% | +3.5% | +4.6% | 12.1 |
Positive = rupee weakened against that currency (more rupees needed to buy one unit) over the stated period. Source: derived daily series as above.
JPY/INR is the only line on the chart that has spent the last five years going the other way. Every other currency in this piece has the rupee weakening against it, by double digits, over five years. JPY/INR fell 10.3% over that window — the rupee actually got stronger against the yen. Combine that with the low nominal yen coupons documented in "Raising Green Debt Globally" (REC's EuroYen bond priced at 1.76–2.20% in January 2024, while the BoJ was still at −0.10%) and the arithmetic of the 2021–24 yen-borrowing rush becomes obvious: Indian borrowers weren't just getting a cheap nominal rate, they were also repaying a shrinking rupee liability on the principal, for years at a stretch. That is about as close to a free lunch as cross-border debt gets — and, per that earlier piece's own caveat, exactly the kind of favourable regime that doesn't last.
JPY/INR's annualised volatility of 12.1% sits between the pegged/near-pegged cluster (USD, AED, SAR, CNY at 6–9.6%) and the rouble's sanctions-driven extreme (52.3%). That's a genuinely different risk profile from either group — a free-floating major-economy currency with real two-way volatility, not a peg and not a crisis currency. For an Indian borrower choosing a funding currency, that 12.1% is the volatility an unhedged yen loan actually carries; the "IREDA borrowed at sub-7% all-in" figure documented elsewhere on this site already reflects a hedged cost, which is why it lands so much higher than the naked 1.76% coupon.
"Where the Rupee Actually Stands" grouped USD/AED/SAR as low-volatility, dollar-anchored pairs, CNY as moderately more volatile, and RUB as the outlier. Adding JPY doesn't overturn that ranking, but it adds a category the original five-currency set couldn't show: a currency that is both moderately volatile and has moved in the borrower's favour on trend. USD, AED, SAR and CNY are all trend-against (India pays more rupees for them over time) and low-to-moderate volatility. RUB is trend-flat-ish but extremely volatile. JPY is the only pair in trend-favourable-and-moderate-volatility territory over the last five years — which is a more precise way of saying what "cheap yen debt" actually meant in currency terms, not just interest-rate terms.
What "borrow cheap yen, hold rupee-denominated assets or repay rupee-priced debt" actually is, in market terminology, is a carry trade — borrow in a low-yield funding currency, hold exposure priced in a higher-yield currency, pocket the differential. It is not unique to Indian corporate borrowers: the same mechanism, run by Japanese retail investors nicknamed "Mrs Watanabe," is covered in a companion piece on this site, and at the sovereign/institutional level it has been the dominant force behind yen-funded flows into emerging-market assets generally, India included, for most of the last two decades of near-zero BoJ rates.
It already unwound once, violently, within the window this piece's own data covers. When the Bank of Japan raised rates to 0.25% in July 2024 — ending 17 years of near-zero policy — an estimated $4 trillion in global yen carry positions began reversing. The yen appreciated 7.7% against the rupee in the nine trading days between 29 July and 5 August 2024 alone. The BIS's own account of the episode counted it as a genuine market-turbulence event, not just a currency wobble. India's own yen exposure at the time: roughly 5.8% of a $664 billion external debt stock (as of end-March 2024) was yen-denominated, and Japanese FPIs held about 2.85% of total FPI assets under custody — both large enough to matter, neither large enough to make India the epicentre of the event.
Funding currencies have already started rotating away from the yen since. Reporting from 2026 describes investors diversifying carry-trade funding out of JPY and into the euro and Swiss franc to finance emerging-market positions — consistent with this site's own finding elsewhere that CHF and JPY are now the two most volatile currencies against the rupee among the deep, reachable funding markets. A funding currency that has already delivered one violent unwind, and carries the highest measured volatility against INR, is a rational thing to diversify away from, even before considering whether the next BoJ move goes the same way as July 2024.
What this piece does not establish. A five-year favourable trend is not a forecast; the same "Raising Green Debt Globally" piece already flags BoJ rate hikes (to 1.00% by June 2026, the highest since 1995) as the live risk that could reverse yen weakness and turn future unhedged yen debt costlier, not cheaper, in rupee terms. This piece does not attempt to project where JPY/INR goes next — it only documents what already happened, that it has already broken once inside the same ten-year window, and how both line up with the financing decisions covered elsewhere on this site.
About this article: Researched, written and edited by Umashankar Triplicane Dwarakanathan, with AI research assistance; every figure is meant to trace to the primary source cited. See the Editorial Policy for how sourcing, AI use and corrections work.
