Editor's Choice: Weakening Yen leaves weeping foreign students and families
Akito Tanaka shares his weekly reflections and recommendations
The yen fell to its weakest level in 39 years, with 160 yen to the dollar increasingly becoming the norm. (Photo by Akira Kodaka)
Hello from Tokyo. As I've mentioned in this newsletter a few times, I studied abroad at a university in the United States in the late 1990s. Those three years were immensely rewarding and life changing. What made this experience possible was my parents' support and the strong yen. When I was planning to go to the U.S., the exchange rate stood at around 90 yen per dollar, and it remained relatively stable at around 100 to 110 thereafter. While I was in the U.S., the Asian financial crisis struck, and the yen weakened, but the impact on me was far smaller than it was on many students from Southeast Asia. As regional currencies plunged, several of my classmates were forced to abandon their studies and return home.
Thirty years later, the situation has reversed. This week, the yen fell to its weakest level in 39 years, with 160 yen to the dollar increasingly becoming the norm. Several Japanese editors at Nikkei Asia have children studying abroad, and for them, too, the hurdle of overseas education has become extraordinarily high. If this trend continues, there is a risk that far fewer Japanese students will have the opportunity to study overseas. As the yen's historic decline continues, Nikkei Asia has published an explainer examining the reasons behind the currency's weakness.
For people who earn their salaries in yen, it's a painful situation. But for overseas visitors, Japan's appeal continues to grow. To travelers from Europe and North America in particular, Japan is a heavily discounted destination. In an effort to address overtourism, the Japanese government has raised visa application fees for foreign visitors fivefold. Even so, the cost remains relatively modest in dollar terms: about $90 for a single-entry visa and $190 for a multiple-entry visa valid for repeated visits during its validity period.
The weak yen also has profound implications for Japan's long-term strategy. The government recently unveiled details of a public-private investment plan focusing on 17 sectors where Japan is seen as having a competitive edge, including AI-powered robots, semiconductors, batteries and autonomous driving, totaling 370 trillion yen through fiscal 2040. While the figure appears enormous in yen terms, it amounts to just over $2 trillion when converted into dollars. With downward pressure on the currency persisting, markets are increasingly focused on the timing of potential currency intervention by Japanese authorities. Coverage of Japan's financial markets is one of Nikkei Asia's core strengths, and we look forward to bringing you more in-depth reporting.
1. A report on global wealth from U.K.-based estate agent Knight Frank predicts Southeast Asia will see faster growth in the number of ultra-high-net-worth individuals -- defined as having assets of at least $30 million -- on a percentage basis than anywhere else in the world. Four of the 10 fastest-growing nations are expected to be in the region, with Indonesia at the very top. ASEAN Money explores what is behind this remarkable rise.
2. Although the CPTPP and RCEP, Asia's two mega trade agreements, have faded from the headlines, some industries in the region have started using them to cushion against volatile U.S. import policies. Their overall impact is still limited, but with more countries lining up to join these deals, observers predict momentum will build further.
3. After hitting record highs recently, stock markets in Japan, South Korea and Taiwan are seeing significant volatility. While the AI boom has turned these markets into winners, it has also encouraged investors to build up leverage. In Tokyo, outstanding margin buying reached nearly 6.5 trillion yen, and in South Korea, the KOSPI's volatility index has tripled this year. In Taiwan, leveraged investors are betting on index heavyweight TSMC. Our latest Trading Asia looks at how these aggressive moves may deeply damage investors if market conditions reverse.
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