The Japanese yen has fallen to its lowest level in 34 years. In the past three years alone, the Japanese currency has lost nearly 50 percent of its value.
"These are dimensions that have no analogue on a global scale," Moritz Kremer, Chief Economist at "Landesbank Baden-Württemberg", commented to ARD: "This is an unprecedented devaluation of the yen, which even overshadows Brexit," he adds the expert.
The interest rate policies of other countries seriously affect Japan
The reasons are rooted in the interest rate policy of central banks. Especially the one in the United States, where interest rates are high, and their expected lowering so far has never materialized. In contrast, the Bank of Japan has unexpectedly raised interest rates only once in 17 years.
"An increase in interest rates by the Bank of Japan should have narrowed the interest rate differential and increased interest in the yen, but the opposite has happened," says Kremer. Instead, investor capital continues to flow into the US. And the Japanese economy is facing a number of difficulties - low growth, labor shortages, inflation and limited consumption.
Tourism boom
Nevertheless, the Japanese stock market posted record after record. The boom in artificial intelligence, but also the favorable yen, make this possible. Meanwhile, the depreciation of the yen also had a positive effect on tourism, which also set records. For many tourists, the country is becoming more accessible.
In 2023, Japan was visited by 25 million tourists, which is a huge jump compared to 2022, when 3 million visited the Land of the Rising Sun, notes "El Pais". This year, foreign visitors are expected to reach 33 million, which will set a new record after the 32 million who visited Japan in 2019. The government wants to turn the country into a leading tourist destination, welcoming up to 60 million people in 2060.
At the same time, mass tourism has caused discontent among locals, who resent the behavior of some tourists, and businesses, which complain of a shortage of labor to serve the country's guests. All this led to the introduction of fees to visit parts of Okinawa and restricted access to Kyoto's infamous geisha district.
At the same time, it is not clear how long the yen's decline will continue. Until the US Federal Reserve lowers interest rates - probably in September, this will not happen, predicts Antie Erhard from ARD.
Alexander Detev editor