Japan just got a lot more expensive. Here’s why we’ll keep going

Say it ain’t so. Tell me the dream isn’t over. Someone please reassure me that Japan is still a cheap destination.

But that’s not going to happen, because I’ve had three coffees today and Google is still telling me that the mighty Australian dollar is suddenly buying barely 90 Japanese yen. It used to be over 100, almost 110 last year. But last week it dipped below 90.

The AUD has plunged against the yen in time for blossom season.Credit: iStock

Is it time for panic stations? Surely not. That’s still a good exchange rate, particularly when you consider that this time five years ago, during the Year We Don’t Talk About, that rate was under 70 yen to the AUD.

Still, there’s a worrying trend, a certain downward trajectory.

What is going on? The strength of Australia’s currency relies on the sales of natural resources, which are slowing because China is caught in a trade war, and God, I have no idea what I’m talking about.

What I can tell you is that people far more financially literate than a guy who spends all his disposable income on holidays are saying that this downward trend against the yen is not going to be reversed any time soon. It will fluctuate as US policy fluctuates, but experts are predicting it will bottom out at around 77 yen to the dollar early next year before a gradual climb back towards the mid-80s.

Increased demand has led to increased prices across tourist hotspot Japan.Credit: Getty Images

If that comes true, Japan will – hopefully briefly – be 25 per cent more expensive for Australians than it was in June last year, when the exchange rate was well past 100. That will come as a blow to travellers who have become increasingly obsessed with Japan in the past decade or so and who have begun to think of the country as reliably affordable.

So now you’re probably thinking – should I go somewhere else instead? No, friend. You’re thinking in a pre-tariff world.

In the current, pre-during-post-maybe-during-again world of US tariffs we inhabit, the AUD is doing it tough against most major currencies.

It’s just risen from an almost 20-year low against the USD and buys around 63 American cents. It hasn’t been this low against the euro since a brief period in 2020, and before that you would have to go back to 2009 to see a rate of 56 euro cents, which is where we’re at right now. We haven’t been this low against the British pound since 2015. Ouch.

Staples such as food and drink cost more for visitors.Credit: iStock

That, obviously, is going to make many of our favourite holiday destinations more expensive.

The US is very expensive right now (particularly once you factor in cost-of-living increases that pretty much everyone is saying will be the result of the trade war with China, the country that makes all their stuff). The euro zone is punchy right now for Australian travellers, to say the least. The UK is the same.

Japan, too, is becoming noticeably more expensive, though there’s more to that than just the exchange rate.

This country is an incredibly popular tourist destination, not just among Australians, and that increased demand is leading to higher prices for things such as hotels and airfares. There’s also a rising cost of living in Japan, as there is everywhere, which means staples such as food and drink cost more for visitors, too.

Will this stop Australians travelling to Japan? Will people be altering their travel plans and looking instead to, say, New Zealand, where the exchange rate is steady and working in our favour?

My feeling is no. If you could afford Japan before, you can afford it now. It’s just that those holidays might include a few more konbini dinners than they used to (which is no hardship when you can put together an oyako-sando, a convenience store egg sandwich with a fillet of fried chicken, for about $5).

You might step down your accommodation in Japan a few notches, which is easy in a country with so many comfortable options. You might drink beers in tachinomi – friendly, no-frills, standing-room-only bars – rather than fancier izakaya. You might avoid shinkansen fares and keep your explorations to a narrower radius.

Essentially, it will take more than a small price rise to dissuade Australians from their obsession with the Land of the Rising Sun.

Elsewhere, things could change more dramatically. The US, for reasons that are clear and that I have discussed here many times, has already become a far less attractive prospect (especially while Australians are being summarily detained at the border and having their electronic devices searched).

That could mean a trip to Canada instead. Or, you know, maybe Japan.

European destinations will suffer, too. Europe was already an expensive place to visit – expensive to get to, expensive to stay in, expensive to exist in – so it’s likely some travellers will put off that dream holiday for a few years. More affordable destinations in Asia will seem a better option.

Maybe, you know, Japan. Because the dream is over in some ways. But it’s still one of the world’s great destinations.