Cover Story: Yen’s Decline Tied to U.S.-Japan Rate Gap Is Seen Stretching to 2025

Japanese tourism and exports see gains while fund outflows and higher import costs cause pain

Ahead of the May Day Golden Week holiday, while exchanging currency for a trip to Japan, Zhao Nan (a pseudonym) was surprised to find that 1 yuan now could exchange into nearly 22 yen, up more than 10% from the year’s start. As of May 30, the yuan has climbed a staggering 46% against yen from its March 2020 low.

The depreciation of the yen has spurred Chinese tourism to Japan, with the country becoming the top destination for Chinese travelers during the Golden Week holiday, as reported by Ctrip and other travel platforms. The Japan National Tourism Organization reported that over 3 million tourists visited Japan in April for the second consecutive month.