Crumbling Japanese yen offers more bargain travel for Aussies
Updated . First published at
The plunging Japanese yen has opened the door for Australians to keep enjoying bargain holidays in a favourite tourist destination.
Overnight the Japanese currency dropped to its lowest level against the US dollar in nearly 40 years, with the greenback worth 162 yen, driven largely by Japan’s historically low interest rates and a broad weakness of its currency.
The Japanese yen has slumped to its lowest level against the US dollar for 40 years. AP Photo/Hiro Komae
Early today the Aussie dollar was trading at 111 yen.
The yen’s sharp drop came after Japanese Prime Minister Takaichi earlier this month unveiled a long‑term strategy aimed at accelerating Japan’s economic development, based on bringing down the country’s high debt levels.
Confidence in Japan’s economy was also dented by the impact of the Iran-US war on world fuel supplies. The Asian economic giant relies largely on energy imports from the Middle East.
Investors are now concerned the Japanese government will be forced to intervene to stabilise the yen.
Currency strategist at Commonwealth Bank of Australia, Carol Kong, told nine.com.au the Aussie dollar was now trading about 20 per cent higher against the yen compared with a year ago.
“It is getting very high historically speaking … it will boost the appeal of Japan as a holiday destination for Australian tourists,” she said.
She said Japan’s low inflation rate of 1.5 per cent also offers Australian travellers more spending power and value for money.
But analysts expect a correction between the dollar and yen later this year.
“We do expect the Aussie-Yen to trend lower to about 103 … so it may well worth be locking in a Japan trip now,” Wong said.
The Australian dollar began its surge against the Japanese currency two years, offering bargain travel for tourists.
Figures from the Japan National Tourism Organisation show 1.06 million Australians visited the country in 2025.
Millions of tourists visit Japan every year, with affordability a major attraction. iStock
In contrast to its strength against the yen, the Australian dollar remains in the doldrums against the US currency, trading at 69 US cents today.
Its weak position is uncertainty whether the Reserve Bank will keep interest rates on hold, a perceived willingness of the US Federal Reserve to consider raising them and renewed fighting in the Middle East early this week.
“After four straight weeks lower, the Australian dollar remains heavy and listless, parked around 69 cents and still stuck in a funk, of sorts,” Westpac head of foreign exchange strategy Richard Franulovich said.
New Federal Reserve Chairman Kevin Warsh has pledged to take a tough line on fighting US inflation, and American payroll figures will be closely watched in Australia.
“For the Australian dollar, Warsh and US payrolls carry more weight than the Iran backdrop,” Franulovich said.
But he says weakening commodity prices are also impacting the Australian dollar along with other currencies sensitive to the ups and downs in the sector, such as New Zealand and Canada.
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