Japan’s weaker yen seen as both a blessing and a burden
TOKYO — The Japanese yen has weakened, trading in recent weeks at 20-year lows of 130 yen to the U.S. dollar just when prices of oil and other goods are surging partly due to the war in Ukraine.
The yen’s value against the U.S. dollar and other currencies has fallen mainly because interest rates remain ultra-low in Japan but are rising in the U.S. and other countries. So Japanese who have seen prices barely inch up for many years, or even drop due to deflation, are doubly feeling the ripple effects of rising global inflation.
A cheap yen has historically been welcomed in export-driven Japan, boosting the overseas earnings of its manufacturers when they convert them into yen. Operating profit at Japan’s top automaker Toyota Motor Corp. got a hefty $4.7 billion windfall from the favorable exchange rate.
These days, the weaker currency is a mixed blessing.
Earning less: Tran Ha Van isn’t at all happy about what’s happening with the yen.
For the nearly 10 years she’s lived in Japan almost all of her income has been in yen. Every two months, the Vietnamese technology professional sends money home to her parents, a retired electronic engineer and a housewife.
“What I send them has dropped considerably in value,” she said.
Tran studied Japanese intensively in Vietnam, graduated from a Japanese university, then worked at a major IT services company in sales and operation management.
She plans to start her own business with the yen she has saved up, using her bicultural and bilingual skills to connect Vietnamese
businesses, especially in high-tech, with opportunities in Japan.
The price she charges is set in yen and hasn’t changed. But the cost of hiring freelance Vietnamese engineers is now higher in yen, Tran said.
“For me, I tend to send money more from Japan to Vietnam than the other way around, so it’s inevitably a bigger minus if the yen falls,” she said.
Getaway homes: The news on the weakening yen hasn’t been all bad.
Interest is picking up, said Parker Allen, who runs a business finding bargainpriced homes in the countryside and suburban Tokyo for foreign buyers wanting a second home or office.
He’s only completed a few deals so far, mostly involving executives at top-name American companies who want to live part-time in Japan. He helps bridge the gap between such people and traditional Japanese real estate agencies.
“Most of the time, you’re buying it (the house) for free, and you are paying for the land. If that 30-plusyear-old house is in great condition, you are going to get a fantastic deal,” he said recently, showing one such home, with an elegant tatami-mat room overlooking a garden with rocks and
trees.
Such deals include Japan’s plentiful vacated homes, called “akiya,” which number about 8.5 million nationwide, or 13% of all homes, according to a 2018 government study. Many once were occupied by families whose children moved away. As the parents age and pass on or move to assisted living facilities, the homes often sit abandoned.
For those with dollars buying the homes in yen, the added perk from the exchange rate buys more and adds up to quite a savings.
Lure for tourists: The cheap yen normally would draw foreign tourists eager to take advantage of stronger spending power.
But Japan has kept its borders basically shut to foreign tourists during the pandemic. Once the country reopens, the economy could get a lift from the weak yen. In 2019, before the pandemic, 32 million people visited from overseas.
The government soon will let small numbers of foreign tourists visit as “an experiment.” Only visitors from the U.S., Thailand, Singapore and Australia will be welcome at first, and they must have a special visa, be triple-vaccinated and stick to specific schedules.