I get that Japan were more of a manufacturing powerhouse in the 80s and stagnated since, but Japanese tourism and entertainment has been off the charts popular for the last decade. I know the dollar is still dominant, but it's weaker too since Covid spending. Shouldn't the yen realistically be closer to 100, on par with the USD by now?
by lunapo
21 comments
You literally answered yourself. Stagnated since 80s, no innovation and so on.
Tourism and anime can only do much to the economy. If you look at statistics, it is only a small % of total.
Interest rates and economic growth.
JP invests heavily on us treasuries.
Treasury yields are very high now so there is a high demand for usd to buy these bonds which makes yen weaker.
* Japan being popular has little to do with the yen; tourism is a small fraction of Japan’s GDP
* Currencies are relative to each other. Yen is weak vs. dollar because more investors want USD than JPY. Trump is doing a decent job of scaring global investors away from the US so the USD is actually weakening vs. some currencies and the JPY is stronger now than it was earlier in 2025
* For the JPY to strengthen, we will need to see significant growth in Japan. There has been some (Nikkei225 is strong relatively) but not enough.
They are popular because the yen is cheap
You don’t see hordes of tourists flocking to Switzerland to buy cheap Swiss watches do you?
japan export 50% of its automotive production, a big chunk going to the US so a weak yen helps making the cars cheaper for American buyers
hence the main vocal industry in Japan about US tariff is the Car makers
Simple. More yen selling and dollar buying . Why? That’s a long list. Japanese MNCs doesn’t send money back to japan, NISA encourages US investment , carry trade. Etc
Because Japan has an even greater national debt than the USA. Among the highly developed nations of the world, there is no other country that is anywhere near as indebted.
Their culture being popular or being popular as a tourist destination, doesn’t make a country’s currency stronger. Japan is a nation reliant on importing most raw materials, at the same time it is also highly reliant on exports. But if the former are pricy because they are traded in USD, the cheaper JPY doesn’t mean it automatically exports more.
interest rates. see the panic when there are rumours saying us and jp rates’ gap might reduce
OP, learn about Quantitative Easing.
it was just barely over a hundred yen to the dollar a couple years ago in 2021, came up slowly in 2022 and then bam
No reason to hold yen when foreign bonds will earn you 5%
Because Japan wants it to be that way and America has been looking into it wondering what’s going on
Interest rates and the carry trade.
Because the government and corporate elite that run the governments investments are overseas.
It’s the classic invest overseas, weaken the yen, distract the public by blaming foreigners for coming to Japan due to the weak yen and “not paying taxes” somehow.
Profit.
Comparative interest rates, decreased demand for exports. Two determinants of exchange rates.
Interest rates differential are the main reason, anyone claiming otherwise doesn’t know what he’s talking about. The reason for the current IRD is that post COVID Japan had a low inflation compared to US and Europe, also Japan in general pursue cautious economic policies for a variety of reasons.
It’s the combination of low interest rates and somewhat elevated inflation. If you hold yen bank deposits or even government bonds, the real value of your money will drop over time even if you include interest. The trend for both individuals and institutional investors has been to hold more of their investments in foreign assets. Tourism and real estate purchases are generating some demand for yen and helping to prevent it from weakening further.
Only 0.9% of Japan’s GDP is thanks to non-domestic tourism spending.
Popular culture and entertainment do not determine the value of the currency. The fact that the Japanese government has a longstanding policy to increase the money supply through government borrowing and quantitative easing is the primary reason the yen has devalued in recent years.
The only way that the popularity of Japan culture could affect the yen is if overseas sales of Japanese cultural goods and intellectual property became a much larger portion of Japan’s GDP.
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