If the U.S. dollar loses 70% of its value relative to the Japanese yen, but the prices of Japanese exports sold to the U.S. do not fall by the same proportion, what is the most likely reason?

Explanation

The scenario illustrates partial currency pass-through, where exchange rate changes do not fully translate into changes in export prices. This means that Japanese exporters may absorb some of the currency depreciation instead of passing the entire cost change to U.S. buyers.