asked the Chancellor of the Exchequer why the exchange rate of the pound sterling has fallen against the Japanese yen.

The following table gives percentage movements in the nominal and real yen/£ exchange rate from 1980:

Period averages	Percentage changes on previous year*
	Nominal	Real†
1980	+13	+30½
1981	-15	-8½
1982	-2½	+1½
1983	-17½	-13
1984	-18	-15
February 1985	-3½	—
* Denotes sterling appreciation.
† Calculated by deflating the nominal yen/£ rate by the ratio of United Kingdom to Japanese price movements (using GDP deflators).

The movements in the nominal rate reflected a wide range of factors, including oil prices, whose sharp rise between 1979 and 1980 and steady decline since 1981 (in dollar terms) were broadly reflected in sterling's overall strength and weakness during those periods. Another influence was the faster rate of price and cost inflation in the United Kingdom than Japan over the period. Thus the real yen/£ rate (ie the nominal rate adjusted for inflation)† fell by about 10½ per cent. between 1979 and 1984, far less than the nominal rate.