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Japan offers 'bright spot' for 'trash' Aussie dollar

Japan is being touted as the 'new Bali' as Aussie travellers flock to the Asian islands.

Australia’s currency looks like trash against the US dollar right now. But there’s a bright spot in global foreign exchange markets, and it’s our performance against the yen.

The Aussie dollar has risen strongly against the Japanese currency over the last four years, as the next chart shows. When our currency is strong it means we get more yen for every dollar, making Japanese imports cheaper and travelling to Japan cheap as well.

This is why the Roppongi Hills are echoing with Australian accents.

The red graph shows the Australian dollar increasing in value again the Japanese yen.
The Australian dollar has been rising against the Japanese currency and now buys about 100 yen. (Jason Murphy)

As the next chart shows, Aussies are hitting Japan in big numbers. Since the Covid restrictions fell we’ve flooded back to Japan with a vengeance.

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January is usually the strongest month, and this most recent January (the most recent month for which we have data) is the strongest January on record. More than 100,000 Aussies were in Japan in January.

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The lift in travel to Japan is a big deal.

It’s not just recovering to where it was, we’re going more than before. As the next chart shows, Japan trips made up almost 9 per cent of all travel by Australians in January.

Tsutenkaku tower in Osaka's Shinsekai entertainment district on a sunny day. Osaka, Japan.
Australian accents can be heard throughout Japan as more head to the tourist hotspot. (simonlong via Getty Images)

The snow is a major lure. We’re all over Hokkaido and Niseko is the new Kuta. And a few nights in Shinjuku at the end of the trip is part of the journey.

They’re not calling it Shinjukuta yet but if the yen falls any further they might! Like Bali, a big part of the attraction is how cheap it is compared to home.

Japan
Japan (Jason Murphy)

Why the Japanese yen is weak

A holiday to Japan is cheaper than ever just on currency. But there’s another reason a holiday to Japan is cheap, and it’s linked to the weak yen by the following three steps.

  1. The yen is weak because the Japanese central bank hasn’t lifted interest rates very high (high interest rates make your currency lift).

  2. The reason Japanese interest rates are low is that Japanese inflation is low.

  3. Low Japanese inflation means things in Japan are cheap!

While our prices spent the last two decades skyrocketing, the same is not true in Japan.

You can get a bowl of Ramen for $10 and a can of drink at one of the famous convenience stores for well under $2.

Accommodation in Tokyo is expensive, but outside the capital a hotel isn’t dear at all.

You can stay in a decent city hotel in Osaka for $100 a night per room.

The only downside is the people you meet at the expansive breakfast buffet will probably also be Aussies.