[Stock. Photo Credit to Pixabay]

Japan’s currency, the yen, has seen its value plummet to a new low, reaching 0.0062 USD per yen on July 1, 2024.

This is the lowest exchange rate since the aftermath of Japan’s asset price bubble in the 1990s when the yen fell to 0.0061 USD per yen, according to data from Google Finance.

The yen’s depreciation against the dollar has reached levels not seen in almost 30 years, which raised alarm bells about the state of Japan’s economy.

The situation has drawn considerable attention due to its unpredictable nature.

In March 2024, the Bank of Japan initiated a base rate increase, which led global markets to anticipate a rise in the yen’s value.

However, this expectation proved to be a miscalculation.

Instead of strengthening, the exchange rate between the dollar and yen experienced rapid and jolting changes, leading to a decrease in the yen’s value.

Adding to the uncertainty, the Japanese government recently reduced its GDP growth projections, further lowering the yen’s value in the global market.

The nation is struggling with a GDP shock, as production and exports show limited resilience.

This has been particularly evident in Japan’s automotive sector, where major manufacturers like Toyota have faced export challenges due to irregularities in their certification processes.

The current economic situation bears unsettling similarities to the 1990s economic bubble, which saw the yen valued at 0.0061 USD per yen.

Economic bubbles are characterized by a rapid escalation in market values, followed by a sudden collapse, leaving investors with substantial losses.

During such periods, the price of goods and assets can far exceed their intrinsic value, and when the bubble bursts, the resulting deflation leads to widespread financial hardship.

Initially, the yen gained value following the March base rate hike, but this was short-lived.

By July 1, 2024, the yen had dropped to 0.0062 USD, down from 0.0068 USD on March 12, 2024, showing a pronounced decline in just a few short months.

In fact, this drop in the yen’s value has directly impacted the Japanese people, who are now struggling with a lower standard of living compared to the wealthy foreign tourists visiting the country.

Japan has become an increasingly popular travel destination as the weakened yen has made it more affordable for visitors.

As a result, the Japanese government is considering additional taxes on travelers to soften the economic downturn.

In some regions, such as Osaka, there are already discussions about implementing additional accommodation taxes.

The similarities between the current economic situation and Japan's "lost 30 years" after the 1990s bubble have sparked a public discussion.

Many are beginning to question whether the lost decades are truly over, as the nation’s economic troubles seem far from over.