Impact of Yen Appreciation on Japanese Consumption
“Yen daka” (yen appreciation) is now a common word flowing around Japanese websites, newspapers and TV programs. The US dollar/yen exchange rate was 95 yen on March 17, falling below 100 yen for the first time since 1995. This has resulted in certain booms in the Japanese market:
- Boom of Foreign Currency Buying
The high value of yen to US dollars has encouraged Japanese customers to buy foreign currencies. Sources say that there has been an increase in customers opening bank accounts to start foreign currency transactions. The customers want to buy a large number of US dollars while the value of the dollar is low. This has helped the business of Japanese financial institutions a little, which has been severely hit by subprime-related losses.
- Boom of Overseas Travelling
Thanks to yen appreciation, the number of Japanese travelling overseas has increased, especially the number visiting the United States. Importantly, the high value of the yen has helped travel agencies to recover the losses they have experienced due to high oil prices, which had reduced the number of travellers overseas. HIS, a Japanese travel agency, cheerfully says on its advertisement for overseas travel services: “Now, take this chance! Take advantage of the high value of the yen.”
- Boom of Imported Goods Sales
The high value of the yen also helps retailers to attract customers wanting imported goods. “Bargain sales of imported goods!” is the catchphrase for supermarkets, such as ItoYokado, to advertise fruit and vegetables from the USA, with low prices being offered on the web, in newspapers and on flyers to get the customer’s attention.
But…
It is not all good news; there is some bad news also. The yen appreciation hurts Japanese exporters, while it benefits Japanese consumers buying imports at a lower cost. Japanese stock prices continue to fall due to the loss in foreign investors, and Japanese politics are uncertain. The high value of the yen has cheered up the Japanese economy a little bit for now: but just for now.
March 28 2008 09:29 am | Economy and Weekly Articles
