Name: What does the yen at a 34-year low mean for Japanese companies, consumers and tourism?
Uploaded: 2024-05-02T21:01:20.000Z
Duration: 4 min 16 s
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Adverbs of degree

Bank of Japan, they're keeping their rates steady, they're leading the yen to tumble even further.

So how much longer can Japan take the hit from this weakening yen?

Adverbs of manner

So every time when you ask the question and people would tell you, obviously analysts would be telling me that very shortly, but how shortly it would be, we don't have an idea.

Because if we look at the Japanese yen right now, they are under tremendous downward pressure.

For one thing, we have the Federal Reserve gradually going back to its hawkish tone. That's not helpful in terms of the yen strengtheners.

[At] the same time, we also have the U.S. rising treasury yields and the interest rate differential between the U.S. and Japanese currency and Japanese economy is certainly not helping the Japanese yen.

That's why we are having BOJ governor this morning warning that the weak yen could like rising risks in the country, especially overshooting prices as a whole.

And in the meantime, these factors could actually put Japanese authorities in terms of BOJ and also the Ministry of Finance into a dilemma between supporting Japanese growth as well as stabilizing the yen.

And don't forget that weaker Japanese yen is also hurting Japanese companies as well.

Of course, we've heard the CEOs of Japan Airlines and ANA warning that the weaker yen could hurt their profit margin.

[At] the same time, don't forget Japan also imports most of its energy products from overseas.

So a weaker yen means [a] shrinking profit margin for those companies.

Well, thanks very much, Henry, for that update.

And speaking of the weak yen, monthly visitors to Japan hit a record high in March as the yen tumbles, as we've mentioned.

Official data shows March visitor numbers crossed the three million mark for the first time ever as tourists flocked to Japan to see its famous cherry blossoms.

The Japanese yen has fallen sharply to a 34-year low against the U.S. dollar.

A positive for visitors, but Japanese consumers are feeling the pinch.

(Speaking in Japanese) I think hotels, transportation costs and restaurants are more expensive. The things that foreign tourists say are cheap are incredibly expensive for us.

(Speaking in Japanese) I was happy after the COVID-19 pandemic ended since I was able to go abroad again, but this weak yen situation is pulling me back from traveling.

And for more, CNA's Michio Ishida joins us now from Tokyo.

So, Mich, how is Japan tourism benefiting from the weak yen?

And I guess, what does that mean for the country's economic growth and development?

Well, as you mentioned, Japan recorded over three million inbound tourists in March alone.

The most number of visitors came from South Korea, Taiwan, mainland China, and number four, the United States.

Visitors came with their strong U.S. dollars and the strongest in 34 years against the Japanese yen.

The Singapore dollar is also at a historic high against the Japanese yen, encouraging many from Singapore to visit.

Now, nationwide department stores have seen sales grow 25 months in a row.

I've heard that duty-free shopping resulted in the biggest ever since the survey began in 2014.

And the tourism agency's latest data from October to December suggests inbound tourists spent 37% more than in 2019, that's before COVID-19 spread.

Now, 30 years ago, foreign tourists were hardly visible in Japan.

In 2003, Prime Minister Junichiro Koizumi started a tourism campaign.

In 2019, its economic importance grew to as big as Japan's semicon-related device export.

Domestic consumption remained weak on the back of Japan's economic stalemate, a falling and fast-aging population, so tourism became the new growth segment for the Japanese economy.