The Japanese currency fell to its lowest level since July 2008 on Tuesday. You now get over 160.50 yen for 1 euro. The cautious action taken by the Bank of Japan was the reason for this decline.
The value of the yen has depreciated slightly since 2019. At that time, you were getting less than 120 yen for one euro.
The value of the Japanese yen is declining due to the increasing difference between interest rates in Japan and European and American interest rates. The Bank of Japan announced on Tuesday that it will leave its key interest rate at -0.1 percent. In Europe and the United States, interest rates were raised several times last year to combat inflation.
Inflation in Japan has remained very low for decades. But prices are expected to rise by 2.8 percent this year, the highest inflation rate in years.
The cheaper yen also has advantages
The depreciation of the yen also has positive consequences for Japanese companies and European consumers. For example, the Japanese economy grew rapidly in the first half of 2023. This is partly due to increased exports. Car brands like Toyota and motorcycles like Yamaha and Honda are reaping the benefits.
Because the yen became cheaper for Americans and Europeans, they could import goods from Japan more easily. Tourism in Japan has also attracted a lot of attention, partly due to the cheap currency.
Japan is no longer in the top three
It has recently emerged that the Japanese economy is no longer the third largest economy in the world. For the first time in decades, Japan is no longer in the top three. After the United States and China, Germany now ranks third.
This is because the rating is calculated in US dollars. Although Japan’s GDP (everything citizens and businesses earn together) grows in yen, this is not the case in dollars. Thus, Japan falls on the list.
-
Duitsland stoot Japan na decennia uit top drie grootste economieën ter wereld
-
China is bijna Japan voorbij als grootste auto-exporteur ter wereld
“Travel enthusiast. Alcohol lover. Friendly entrepreneur. Coffeeaholic. Award-winning writer.”