He wasn’t thinking about this when he booked his vacation, but upon his arrival in Tokyo, Laurent Poyart took advantage of the concrete effects of the weakness of the yen against the dollar. “It was an excellent surprise, especially since Japan had a reputation for being expensive”, says this French tourist, who spent two weeks in April in the Archipelago with his wife, Annie. The couple was able to enjoy ramen for 5 euros per person and take advantage of low prices on public transport.
And for good reason: on April 29, the Japanese currency, continuing its long fall, crossed the threshold of 160 yen (0.95 euros) for 1 dollar for the first time since 1990. In a decade, it has plunged by 35%. against the greenback and 17% against the euro. This phenomenon is largely due to the mismatch in monetary policies: rates are higher in Europe, and especially in the United States, than in Japan, stuck in weak growth for three decades. Result: capital favors American investments to the detriment of those of Tokyo, which weakens the Japanese currency.
Tourists, like Laurent Poyart, are the first to benefit, therefore, because this weakness of the currency increases their purchasing power in the Archipelago. This is evidenced by the record amount reached by sales of tax-free products in March. At 50 billion yen (297.78 million euros), they were 2.4 times higher than those of March 2023. Department stores also saw their results increase by 9.9% over the same period.
Promise of a salary increase
The weakness of the currency, on the other hand, penalizes local consumers, because it fuels inflation: this reached 3.1% in 2023, unheard of since 1981, in the country, where the index of prices had been sluggish for more than twenty years. “Prices are increasing but not income”, deplores Koji Yamagata, employee of a subsidiary of a large group specializing in advertising. The promise of a 5.28% increase in wages in large companies, obtained during the traditional “shunto”, the “spring offensive” of the unions, is slow to materialize and could be insufficient. Real wages fell 2.5% in March, posting their twenty-fourth monthly decline in a row.
In this context, the Japanese are monitoring their spending. They go abroad less and, when they do, they favor destinations with weak currencies such as Argentina, Egypt or Turkey, a country to which reservations have doubled compared to the period before the pandemic.
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