Key facts
- The Japanese yen has strengthened against the US and Australian dollars in recent weeks.
- Interventions by Tokyo and Washington have aimed to bolster the yen.
- The yen's decline over recent years made Japan an affordable destination for Australian travellers.
- About 1 million Australians visited Japan in 2025-26, a threefold increase from a decade ago.
- The Australian dollar has risen by over 30% against the yen in recent years.
- Analysts at IG suggest the yen could rise to levels not seen since 2023 if it breaks through technical levels.
The Japanese yen has recently strengthened against both the US dollar and the Australian dollar, a shift attributed to interventions by Tokyo and Washington aimed at supporting the currency. This move raises questions about the future affordability of Japan for Australian travelers, who have increasingly flocked to the country due to a prolonged period of yen weakness.
For years, a declining yen made Japan an attractive and budget-friendly destination, leading to a threefold increase in Australian visitors over the past decade, with approximately 1 million Australians visiting in 2025-26. The Australian dollar's appreciation of over 30% against the yen further enhanced the affordability of shopping, dining, and sightseeing.
Dean Long, chief executive at the Australian Travel Industry Association, described the previous currency situation as a "once-in-a-generation currency position" that allowed many Australians to experience Japan more fully. He likened it to the period between late 2010 and 2013 when the Australian dollar surged against the US dollar.
However, the "carry trade," a strategy where investors borrow yen at low interest rates to invest in higher-yielding currencies, has historically pressured the yen downward. Japanese authorities are keen to halt the currency's fall, which has increased import costs for energy and food. The US has also reportedly deterred Japan from selling US treasuries, which could raise US borrowing costs.
Analysts at IG suggest that if the yen breaks through certain technical levels, it could continue to strengthen significantly. While Joseph Cheer, a professor of sustainable tourism, believes a moderate increase in cost might not deter Australian travelers immediately, a sustained yen rise could make other Asian destinations like Vietnam, which is seeing growing interest from Australians, more competitive. South Korea and China, with its growing cultural appeal among younger Australians, are also emerging as strong contenders for holidaymakers looking towards Asia.