These days, whenever I lead a tour to Japan, there is one question that almost every traveller asks: “Leesan, is everything in Japan really cheap now?”
My answer is almost always the same: “If you’re looking only at the exchange rate, then yes. This is probably one of the most affordable times to visit Japan in recent years.”
It sounds like a simple answer, but behind it lies the story of more than three decades of economic transformation in Japan – and the quiet struggles of countless Japanese families.
I first arrived in Japan as an international student in 1991. At the time, US$1 equalled to around ¥130. By the time I graduated in 1996, the yen had strengthened dramatically, reaching around ¥80 to the dollar.
Back then, the Japanese yen was regarded as one of the world’s strongest currencies. Those were the “boom years” when Japan’s economy was thriving.
As a student, I worked part-time washing dishes at a ramen shop, earning about ¥700 an hour. Living costs were still relatively affordable, and my wages were more than enough to cover my daily expenses.
Looking back, the yen’s journey had been remarkable: in 1986 it was ¥162 per US$1; in 1991, ¥130; 1995, ¥80; 2011, ¥75.57; and in 2016, ¥100.
Few could have imagined that 40 years later the situation would actually be in reverse. In July 2026, the exchange rate reached a record ¥162.8 to US$1 (or RM4.10).
Today, that same ramen shop pays between ¥1,200 (RM30) and ¥1,350 (RM34) an hour. Yet wage increases have failed to keep pace with the decline in purchasing power. For many Japanese workers, life has become more difficult despite earning more on paper, and their standard of living continues to deteriorate.
For overseas visitors, however, the weak yen has become an unexpected travel windfall. Travellers from Taiwan, Singapore, Australia, the United States, and the European Union – whose currencies are relatively stronger – feel the benefits most clearly.
A luxury hot spring ryokan that once charged ¥20,000 to ¥30,000 a night used to seem expensive. Today, even if room rates have doubled, the favourable exchange rate often makes the cost feel surprisingly reasonable (RM501 to RM752 for the above prices).
The same applies to premium sushi, Kobe beef, and traditional kaiseki cuisine. What used to be a once-in-a-lifetime indulgence has become an experience many visitors willingly splurge on.
“Since we’re already here, let’s have the best,” they say.
Drugstores, electronics retailers, luxury boutiques, and shoe stores remain packed with foreign shoppers. Combined with Japan’s tax-free shopping system, many products are now cheaper than in their home countries.
But while foreign tourists happily spend, ordinary Japanese families face a very different reality.
Japan depends heavily on imports for energy, food, and industrial raw materials. When the yen weakens – especially against the backdrop of continuing geopolitical tensions and conflicts in West Asia – import costs inevitably rise.
Fuel, electricity, natural gas, milk, eggs, coffee, bread, and many other daily necessities have all become noticeably more expensive.
For decades, Japan was famous as the country where prices rarely increased.
Gyudon, the nation’s iconic beef bowl, remained inexpensive for years and symbolised Japan’s stable prices. Today, however, even major restaurant chains and retailers have repeatedly raised prices. Supermarkets constantly update price tags on rice and other groceries, while convenience stores now sell a simple 320ml canned drink for well over ¥170 (RM4.20).
Many of my Japanese friends tell me they now prefer shopping at Costco because it offers better value for families.
Whenever I see local shoppers carefully comparing prices item by item, I remind myself of one thing: We think Japan is cheap because of the exchange rate. They feel life is becoming harder because they actually live here.
Another visible consequence of the weak yen is that fewer Japanese are travelling overseas or studying abroad.
Thirty or 40 years ago, Japa-nese tourists could be found almost everywhere in the world, famous for their remarkable spending power. Today, only around 17% of Japan’s population holds a valid passport.
The country that once “bought the world” has gradually become one that “welcomes the world”.
It is one of the most fascinating role reversals of modern Japan.
Of course, a weaker yen is not entirely negative.
Major exporters such as Toyota, Nintendo, and Sony benefit because overseas earnings translate into more yen when converted back home, boosting profits and stock prices.
However, much of Japan’s manufacturing has already moved overseas. As a result, the benefits of a weaker currency are far less significant than they were 30 years ago.
Ironically, bankruptcies among small and medium-sized enterprises continue to rise, bringing higher unemployment in their wake. Some even worry that economic stress could eventually contribute to higher divorce rates.
Perhaps the greatest beneficiary of all remains Japan’s tourism industry.
The Japanese government has set an ambitious target of attracting 60 million international visitors annually by 2030. In 2025, the country welcomed a record 42.8 million foreign visitors.
Tourists bring spending – but also new challenges.
Beyond driving up prices in tourist destinations, overtourism increasingly disrupts the daily lives of local residents. It has become one of the biggest issues Japan must confront as its tourism industry continues to grow.
Public frustration toward foreign visitors has become increasingly noticeable in many parts of the country.
So yes, Japan may seem “cheaper” now because of the exchange rate. But for many Japanese people, life has become considerably more expensive.
Across the country, households continue to shoulder rising costs, often in silence.
Many Japanese also ask, “Why can’t the government stop the yen from falling?”
Although a wagyu meal is still considered a luxury experience, more visitors now ask for it.
The truth is, it has tried.
Japan has spent roughly US$80bil (RM326.97bil) intervening in currency markets to support the yen, but with limited success.
The deeper problem lies in Japan’s prolonged ultra-low interest rates – close to zero or around 1% – while US interest rates remain around 4%. Naturally, capital flows toward higher returns overseas, draining domestic funds.
At the same time, the Bank of Japan cannot aggressively raise interest rates because the country’s total public debt has reached around 260% of GDP. Any substantial rate hike would dramatically increase interest payments, placing enormous pressure on government finances.
Personally, I still hope that one day the yen can regain long-term stability.
After all, a nation’s true competitiveness should never depend on a continually weakening currency. It should rest on something far more fundamental: giving its people the confidence to live securely while maintaining long-term political, economic, and regional stability.
Travel allows us to appreciate beautiful landscapes.
Exchange rates, however, reveal the realities – and anxieties – of an entire nation.
🔸Published in The Star, 25 Jul 2026
