- Japan’s weak currency is boosting tourism, with a record 3.1 million visitors in March.
- The depreciation of the yen encourages tourists to spend more on luxury goods.
- The currency is having a negative impact on outbound travel, with more Japanese tourists staying in the country.
Japan is a popular tourist destination. A weak currency ensures that it will remain weak for foreigners.
The country has just broken its pre-pandemic tourism record, with 3.1 million foreign visitors in March. The government said it was on track to surpass the 2025 target of 32 million annual foreign visitors this year, after 8.6 million tourists visited in the first quarter of 2024.
Japan opened to tourists in October 2022, after more than two years of strict pandemic-induced border restrictions. Pent-up demand, combined with cheaper currency, fueled record visitor numbers.
Tourists are staying longer and spending more due to the weak yen, making it cheaper for foreigners to purchase accommodation, activities, food and gifts. The yen has fallen almost 10% since the start of the year against the dollar.
Japan’s currency has depreciated largely because of high interest rates in the United States, making the dollar more attractive to investors. A historic rate hike in Japan last month — the first since 2007 – did little to reverse the downward trend.
Japan is a tourist hotspot due to its status as a culture and entertainment icon, its natural wonders and its unique cuisine. Tourists from South Korea, China, Taiwan and the United States accounted for the largest share of foreign visitors in March, according to the Japan National Tourism Organization.
Japanese carriers like Japan Airlines and ANA plan to cash in on the tourism boom by operating more routes from Asia.
The sharp decline in the yen has also increased demand for luxury goods. Foreign tourists are taking advantage of weaker currencies by buying cheaper products from high-end brands such as Swiss watchmaker TAG Heuer, Chanel and Prada in Japan, Bloomberg reported earlier this month.
Although the weak yen is a boon for foreigners, it seriously hurts Japanese travelers.
The number of outbound travelers was less than half the number of inbound travelers in March, according to the National Tourism Office. Outbound travel to Japan fell 37% last month compared to the same period in 2019, although it increased from February, according to agency data.
High airline ticket costs and low purchasing power are forcing more and more locals to abandon international travel in favor of domestic destinations.
businessinsider
