[Japanese Yen, Photo Credit to Unsplash]

The Japanese yen’s decline has been causing a variety of problems, including over-tourism and inflation.

On June 27, 2024, the Japanese yen displayed a mind blowing exchange rate of 160 yen per dollar, undermining the fact that the value was 1.5 times higher five years ago.

The last time Japan underscored this result was in July of 1990, when the Japanese economy’s infamous bubble burst.

The yen has been underperforming since Covid disrupted the global economy back in 2019 and 2020.

The main cause of the yen’s weakening was found to be a difference between the United States and Japan’s interest rate.

This difference started when the U.S increased its interest rate to avoid inflation; the interest rate was found to be more than 5% higher in the U.S.

People started exchanging dollars over the yen for this mentioned reason, causing the value of the yen to sink.

With the cheap price of the currency, Japan was, and is continuously being targeted as a cheap attraction for travelers; people who couldn’t travel due to Covid in the past started moving around, causing the first problem: over tourism.

With a tremendous amount of visitors conjugated in a tight area, cases of loud noise or damage to neighborhoods have increased, which has become a cause of concern for locals.

For instance, in March of this year, NHK reported that locals in Kamakura, which used to be a quiet village, are now suffering from accidents and disruptions, caused by tourists.

Kamakura is a seaside town located just below Tokyo.

The town is being crowded due to a famous manga (traditional comic) called Slam Dunk.

As a railroad in Kamakura was illustrated gorgeously in the book, Slam Dunk fans started gathering around the region, which caused chaos in the town with lots of people.

With crowds of people shouting and making shutter noises from pictures, it has created overall turmoil.

The sudden change in the noise level was enough to trigger complaints from local residents, as they requested tourist restrictions to be put in place by the nearby government.

As a solution, the government has set up guards , restricting the amount of people and controlling the crowd in such a way to minimize damage to residents.

Related to over-tourism, inflation is a harsh problem to locals as foreign products in Japan are seeing an increase in their prices .

The exponential change of the exchange rate gave no choice to foreign businesses but to increase their products as the margin they obtained with the original prices wasn’t what it used to be in the past.

Japanese people are now struggling to buy imported goods, having to pay over 30 percent of what they used to in the past.

Recent studies found out that market trends of Japanese citizens are shifting towards domestic products because of this reason.

People that prefer domestic companies over foreign companies are selecting Japan in the global market.

Overall, the drop of the yen is affecting Japanese citizens in diverse ways, highlighting the harshness of over-tourism and inflation.