Stronger yen puts Japan’s budget appeal for Australians under pressure
The yen has reached its strongest level against the Australian dollar in about six months, raising questions over whether Japan’s recent tourism boom can continue.
The Japanese yen has strengthened to its highest level against the Australian and US dollars in about six months after reported efforts by Tokyo and Washington to support the currency. A sustained rise would reduce the Australian dollar’s purchasing power in Japan, making accommodation, food, shopping and sightseeing more expensive.
The move follows several years in which the Australian dollar rose by more than 30% against the yen. That shift helped drive a surge in Australian tourism, with about 1 million Australians reportedly visiting Japan in 2025–26 — roughly three times the number a decade earlier.
Japan became the third-most visited destination for Australians after Indonesia and New Zealand, according to the Australian Bureau of Statistics. The prolonged weakness of the yen made it easier for visitors to spend on experiences that had previously been considered costly.
Currency movements remain difficult to forecast. The yen’s decline was reinforced by the carry trade, in which investors borrow yen at low interest rates to invest in higher-yielding currencies. Analysts at IG have said a break through key technical levels could lift the currency to levels not seen since 2023, although that outcome is uncertain.
A stronger yen may not immediately weaken demand. Travel industry representatives say Japan retains significant appeal, while analysts expect Australians to tolerate a moderate increase in costs. A sustained rise could nevertheless increase competition from Vietnam, China and South Korea, which are also attracting greater interest from Australian travellers.
