Source: Beijing Youth Daily

April twenty _ ninthOdininfinityreelsAt one point, the yen depreciated to 160 yen against the dollar, the lowest in 34 years since April 1990. The exchange rate of the RMB against the Japanese yen also rose to 21 from about 20 at the beginning of the year.OdininfinityreelsAround .8, the yen has depreciated by 9% against the RMB this year. For international tourists, the depreciation of the yen means that as many local currencies can spend more. A reporter from Beijing Youth Daily learned that more and more Chinese tourists are visiting Japan recently, and there are long queues in front of many luxury stores in Japan.

There is a long queue in front of luxury stores in Japan

"the yen plummeted.OdininfinityreelsI'm going to Japan to scrape wool. " Yang Juan (not her real name), who likes to buy brand bags, has booked air tickets and hotels and is ready to fly directly to Japan on May 4. In fact, during the Spring Festival this year, Yang Juan has asked her friends to buy a LV bag in Japan, which cost nearly 1.Odininfinityreels.2000 yuan, which is more than 1800 yuan cheaper than in China. However, with the recent sharp fall in the Japanese yen, Yang Juan found that the bag is now bought in Japan for less than 11000 yuan, which is about 1000 yuan cheaper than when she bought it.

"if I buy more things this time, I'm sure I can earn back all the money from air tickets and hotels." A LV bag that Yang Juan likes is now priced at less than 17000 yuan in Japan, nearly 6000 yuan cheaper than in China, equivalent to a 27% discount, and some styles have a bigger price difference.

It is understood that many luxury stores in Ginza, Japan are recently full of tourists or purchasing agents who want to buy luxury goods like Yang Juan.

However, the yen exchange rate has fluctuated greatly recently and may change greatly in a short period of time. "this time I really saw the terrible exchange rate difference." Xiaoyu from Zhejiang went shopping in Osaka, Japan with friends a few days ago, and the two bought the same brand-name bag at Takashima Department Store. It took only two hours, and the price difference was nearly 600 yuan. Xiaoyu bought it first and swiped 20138.91 yuan, and the exchange rate at that time was 1 yen = 0.046704 RMB. Two hours later, when Xiaoyu bought it, the exchange rate was even lower, becoming 1 yen = 0.045346 yuan, and the amount of swiping by credit card was 19550.32 yuan.

In addition to Chinese tourists, tourists from other countries have also flocked to the country attracted by the depreciation of the yen. According to the latest data from the Japan Tourism Agency, the spending of foreign tourists in Japan from January to March 2024 reached 1.75 trillion yen, an increase of 73.3 percent over the same period last year, a record high. Among them, per capita tourism expenditure increased by 41.6% over the same period in 2019 to 208700 yen.

Sales of department stores across Japan totaled 510.9 billion yen in March, the 25th consecutive month of growth, according to the Japan Department Store Association. Among them, the tax-free sales of tourists visiting Japan increased 2.5-fold to 49.5 billion yen, the highest level since the survey began in October 2014, and set a new record for three consecutive months. Sales of duty-free goods in 2023 were 348.4 billion yen, about three times that of the previous year and the highest since 2015 with full-year figures.

The cost of living in the area has increased significantly.

It is understood that the devaluation of the yen has enhanced the competitiveness of Japan's export industry, but Japan is heavily dependent on imports of raw materials, energy and food, and the depreciation of the yen has also led to a further increase in imported inflationary pressure.

For example, the continued decline in the exchange rate of the yen has made a lot of money for export companies such as Toyota. Suppose a Toyota sells for $30,000 in the United States. The average annual exchange rate of the yen against the dollar in 2019 is Y109, while Toyota earns 3.27 million yen per car. Toyota will get 3.93 million yen for the same car after falling to 131yen in 2022, rising to 4.38 million yen by 2024. The same car costs 660000 yen more in 2022 than in 2019 and 1.11 million yen more in 2024 than in 2019.

However, for import enterprises, the depreciation of the yen means that the prices of imported goods rise, which brings a huge blow to small and medium-sized enterprises, and also increases the cost of living of the Japanese people through price transmission. Mr. Peng, who lives in Japan, said that when he was cheap, he bought a whole Chinese cabbage for only seven or eight yuan, but recently the price went up, and he could only buy four Chinese cabbages. A type of chicken he often buys in the supermarket has risen from 400 yen a box more than a year ago to more than 600 yen now.

For some domestic Japanese consumers who have plans to go abroad, the depreciation of the yen has greatly increased their travel costs. It is reported that in order to save money, some Japanese tourists have begun to choose more cost-effective ways of travel and accommodation, such as choosing relatively cheap transit flights, replacing hotels with accommodation, and bringing their own food to cook their own meals.

Will the yen continue to fall?

Many people in the industry believe that the tolerance of the Bank of Japan is an important reason for the recent sharp fall in the yen. The Japanese government has repeatedly expressed concern about the continued depreciation of the yen, which will continue to import inflation into Japan and worsen its terms of trade (making exports cheaper but imports more expensive), but the BoJ lacks a strong willingness to intervene.

Recently, Kazuo Ueda, governor of the Bank of Japan, reiterated at a press conference that core inflation trends are the most important, and that a weak yen may only become a monetary policy issue when the yen's impact on core inflation can not be ignored. this statement also caused the yen bears to fight back.

Looking to the future, market participants generally believe that it is impossible for the yen to reverse its depreciation in the short term.

Zheshang Securities Macro Research team pointed out that the recent weakening of the yen is due to the resonance of internal and external drivers. First, since March, US inflation has continued to exceed expectations, the Fed's interest rate cut expectations have withdrawn significantly, and the strong performance of the dollar index has brought depreciation pressure on the yen. Second, Japan's own economic and inflation performance is weakening (especially domestic demand), and the Bank of Japan is more dovish. Looking to the future, the yen exchange rate may continue to weaken from a fundamental perspective, and even if the Bank of Japan intervenes, it can only stop falling, and the reversal of the trend still needs the improvement of both the external environment and Japan's own fundamentals.

The team expects that the dollar / yen exchange rate may continue to fluctuate around 150 in the second quarter and may gradually rebound in the second half of the year. The exchange rate of RMB against Japanese yen may remain in the current range of 4.5-4.8 in the second quarter, and the short-term weakening of the yen may increase the trade deficit in services such as tourism, but the overall impact on China's balance of payments is limited.

CITIC Securities Research News also believes that resistance to the appreciation of the yen in the future will remain high. On the one hand, Japan's domestic demand is expected to remain sluggish until Japan's real wages rise. The Bank of Japan said in March that it would choose an appropriate policy interest rate level based on prices and economic prospects, so it is expected that the Bank of Japan will have a low probability of raising interest rates quickly. On the other hand, the resilience of the U.S. economy is still high, and the U.S. inflation stickiness still exists. The Federal Reserve's interest rate cut this year is expected to be only 75bps under optimistic circumstances, and there is a possibility that the timing of interest rate cuts will move backward. The large gap between the Japan-US interest rate spread and the economic growth momentum of the two countries may persist for a long time, which may continue to limit the strength of the yen.

Written by our reporter Cheng Jie