While other countries have had to deal with inflation for many years, Japan has had 20 years of deflation. But at the moment, when the domestic currency weakens, many Japanese people have begun to feel the heat of rising commodity prices, especially imported goods.
“There are two main reasons why yen devaluation. The first is the high energy prices after the war in Ukraine broke out. Japan is the largest energy importer as a percentage of GDP among major currencies, so basically higher energy prices are negative for the Japanese Yen,” said Shusuke Yamada, Head of Strategy Japan exchange rate strategy at Bank of America.
Ms. Van has been living in Japan for 10 years now. She said that when she went to the market to buy ingredients for Vietnamese food, the price had skyrocketed.
“Every month I send money to my parents back home, but now the amount has decreased much compared to before. For example, I want to buy a loved one a normal personal computer that costs 50,000 yen. but now it has increased to 70,000 yen,” said Tran Ha Van, a Vietnamese resident in Japan.
Japanese Yen. (Photo: Bloomberg)
However, the yen at a record low against the dollar is good news for exporters in the country of cherry blossoms. Japan’s top automaker Toyota recorded a whopping 610 billion yen ($4.7 billion) in profits from a favorable exchange rate.
As for Mr. Parker Allen – broker real estate For foreigners to buy houses in Japan, the depreciation of the Yen also brought him more customers.
Mr. Parker Allen said: “It’s like real estate in Japan is discounting 20% or 30%. Many customers are excited about this reduction and increase their personal budget by 2 to 3 times.” .
Mr. Allen’s clients are often the heads of famous corporations in the US, trading in USD to buy houses in Japan so that they can come and stay anytime they like.
But the current exchange rate is not what the Japanese government is aiming for. The government of this country always keeps the exchange rate at 105 to 110 yen to 1 USD. However, after two decades of deflation, in April last year, inflation in Japan hit the threshold of 2.5%. If the Yen continues to weaken, it will push up the cost of living and affect people’s living standards.
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