Japan's Weak Currency: A Blessing for Tourists, a Curse for Locals

For decades, Japan was famous for its stable prices and strong economy. However, in recent years, the country has seen a decline in its currency, making it more expensive for locals to live but cheaper for tourists.

The Japanese yen has weakened significantly since the 1990s, with the exchange rate reaching a record high of ¥162.8 to US$1 in July 2026. This means that prices for imported goods, such as food and fuel, have increased substantially, making life more difficult for ordinary Japanese families.

Despite this, tourists from countries with stronger currencies, such as Taiwan, Singapore, Australia, the United States, and the European Union, are benefiting from the weak yen. They can now afford luxury items that were previously out of their budget, such as premium sushi and Kobe beef.

The Japanese government has set an ambitious target of attracting 60 million international visitors annually by 2030, but this has also led to concerns about overtourism and its impact on local residents. The country's tourism industry is growing rapidly, but it also brings new challenges, including rising prices in tourist destinations and disruptions to daily life.

The Bank of Japan has intervened in currency markets to support the yen, spending around US$80 billion to do so, but with limited success. The deeper problem lies in Japan's prolonged ultra-low interest rates, which have drained domestic funds and made it difficult for the country to aggressively raise interest rates without increasing government debt.