Shoppers delight amid weak yen

With the ongoing slump in the yen which sank to a new 34-year low earlier this week, Japan has seen an influx of Hongkongers taking advantage of the weaker currency and snapping up everything from designer goods to daily necessities. On Monday, the yen fell to 160 to the US dollar before recovering. The Japanese currency was down some 10 percent since the start of the year and 30 percent from three years ago. Many Hong Kong travellers have been visiting Japan since the end of the pandemic, and the trend is not about to end anytime soon. “The yen is very cheap right now, so it’s a great time to go shopping here,” said Maggie Kwong, a Hong Kong banking professional who went to Tokyo for her second trip to Japan this year. “For example, I went to buy a pair of running shoes... Usually the shoes would cost around HK$1,000, but I was able to buy it for just under HK$500 for the same pair of shoes. "So definitely, the fact that the yen has weakened has given me more motivation to come visit Japan and to spend more." Steve Huen, executive director of EGL Tours, told RTHK that the number of Hongkongers travelling to Japan was up 20 percent in both March and April compared with a year ago. But he said a weaker yen does not necessarily mean cheaper tours, citing higher demand not only from Hong Kong but also around the world, especially North America, with a record three million foreign holidaymakers in Japan in March. Huen also said Japanese people who opted to travel domestically instead of overseas added to demand. Still, he said Hongkongers find prices to be attractive. “A ramen index also suggested that a ramen in Japan now costs about HK$50, versus the about HK$120 to HK$150 in Central in Hong Kong," he said. There has been speculation that Tokyo has intervened to prop up the currency. “An actual intervention would be authorities directly selling US dollars and buying the yen in the foreign exchange markets to support the yen, but the impact from such an intervention will be rather short-lived because the foreign exchange reserves that the Japanese government holds are limited,” Ken Cheung, chief Asian FX strategist at Mizuho Bank, said. “It will not change the yen’s weakness in the long term, before the US Federal Reserve starts to cut interest rates later this year." He expects the yen to remain at about 150 to 160 against the greenback for some time. “This will give travellers from Hong Kong an advantage to visit Japan, but it will make the Hong Kong inbound tourism recovery even slower due to the linked exchange rate between the Hong Kong dollar and the US dollar,” Cheung noted.