In the unpredictable world of global currency markets, there has been one safe bet: that the Japanese yen would continue its relentless decline.
In recent weeks, that trade has started to unravel after Tokyo and Washington intervened to support the longsuffering Japanese currency.
The US treasury secretary, Scott Bessent, went so far as to dare traders to bet against bilateral efforts to bolster the yen.
While the high-stakes currency game plays out, there are emerging questions over whether the era of budget-friendly trips to Japan is coming to an end for Australian travellers.
Australians are still Tokyo dreaming
Once considered an expensive destination, a years-long decline in the value of the yen has helped a generation of Australians visit Japan, making it the third-most visited destination after Indonesia and New Zealand, according to the Australian Bureau of Statistics.
About 1 million Australians went there in 2025-26, representing a threefold increase from a decade ago.
Numbers have surged since the pandemic reopening, at the same time as the Australian dollar has risen in value by well over 30% against the yen, bringing down the cost of shopping in Tokyo, dining in Osaka and sightseeing in Kyoto.
Dean Long, chief executive at the Australian Travel Industry Association, says it’s been a “once-in-a-generation currency position”.
“Japan has always had a high level of appeal, but suddenly people could actually do the things that they wanted to do because of the currency,” says Long.
He likens the experience to the period that ran between late 2010 and 2013 when the Australian dollar surged above parity with the US dollar.
“What your Australian dollar could do in the US was extraordinary, so people had a higher quality experience,” Long says.
‘Carry trade’ putting downward pressure on yen
Forecasting currency movements is notoriously difficult, and there’s no certainty that the yen will strengthen.
To do so, investors will need to unwind one of Wall Street’s favourite strategies which involves borrowing yen at low interest rates to invest in higher yielding currencies.
The “carry trade”, as it is known, has historically put downward pressure on the yen.
Japanese authorities want to halt a plummeting currency that has driven up energy and food import costs, while the US recently joined the effort to deter Tokyo from selling US treasuries, which drives up the US government’s own borrowing costs.
The Japanese currency has now reached its highest level against the US and Australian dollars in about six months, raising the possibility that a longer-term trend is setting in.
Analysts at IG have noted that if the yen breaks through a series of technical levels, then “all bets are off” and it could rise to levels not seen since 2023.
Japan must compete with Vietnam and ‘Chinamaxxing’
Joseph Cheer, professor of sustainable tourism and heritage at Western Sydney University, says he wouldn’t expect a change in travel habits even if Japan became moderately more expensive to visit.
“There’s a great deal of tolerance before Australians would start rethinking about whether Japan is a good value proposition,” says Cheer.
He says a sustained rise in the yen could, however, open the door for other Asian nations offering competitively priced holidays to entice Australian tourists away from Japan.
Vietnam is recording huge interest from Australians, with annual visits now more than double what they were a decade ago.
There is also a “Chinamaxxing” social media trend of younger people interested in Chinese culture. More Australians visited China last financial year than the US, in a reversal of long-term holiday trends.
“There’s been a cultural turn in the last decade where Australians are looking more towards Asia, rather than travelling long-haul,” says Cheer.
“South Korea can give Japan a real run for its money and everyone’s trying to fill up on Chinese culture, which is going to be very stiff competition especially if Japan becomes more expensive.”
