Are Tourists Coming to Japan Because of the Weak Yen? Low Prices Alone Do Not Create Demand

The other day, I watched a video in which a British presenter used a BBC news report to explain why more British tourists are visiting Japan now.

The biggest reason he gave was remarkably simple.

The yen is weak.

I think that is certainly true.

No matter how much someone loves Japanese anime, wants to see the temples of Kyoto, or dreams of eating sushi in Japan, they cannot make the trip if it costs too much. The weak yen has probably lowered the barrier between wanting to visit Japan and actually boarding a plane.

Still, something about that explanation bothered me.

If a currency becomes cheap, do tourists really rush to that country?

Of course not.

Low Prices Do Not Automatically Bring Customers

Many countries around the world have experienced sharp declines in the value of their currencies.

Yet international tourists do not flood into every one of them shouting, “Everything is cheap!” Sometimes a currency collapse simply makes imports unaffordable, drives up food and fuel prices, and leaves local people struggling.

The crowds visiting Japan cannot be explained by the weak yen alone.

A more accurate explanation is this:

Something people already wanted became cheaper.

If a product that was previously too expensive goes on sale for 30% off, people may hurry to buy it. But putting a half-price sticker on something nobody wants will not create a long line.

Tourism works the same way.

Japan already had places and experiences that made people want to visit: the temples and shrines of Kyoto and Nara, Tokyo, Japanese food, anime and games, hot springs, snow, public safety, and an extensive transportation network.

Then the yen weakened.

The appeal was not newly created. A discount sticker was placed on something that was already attractive.

Being Known as “Cheap Japan” Brings Mixed Feelings

For Japanese people, this is not an entirely pleasant story.

Everything feels expensive when we travel overseas. Imported goods cost more at home. While visitors happily say, “Japan is so cheap,” Japanese shoppers look at supermarket prices and sigh.

It is understandable that some people want to say:

“Japan has become popular only because the country has become poorer.”

But if becoming cheaper were enough to attract visitors from around the world, building a tourism economy would be easy.

A country would only need to crash its currency.

Obviously, that would destroy the country.

What Can You Sell When Your Currency Weakens?

The more important question, I think, is whether a country has something that can earn foreign currency when its own currency loses value.

Japan has tourism. It also has export industries, particularly manufacturing.

A weaker yen raises the cost of imported raw materials and energy. At the same time, Japanese products and services become more affordable to customers from abroad.

In other words, even when the exchange rate moves in an unfavorable direction, Japan still has ways to use that change to earn money from overseas.

That is very different from a country where a weaker currency does nothing but raise food and fuel prices until daily life becomes unsustainable.

People Were Already Waiting to Buy

When we hear that foreigners are buying because Japan has become cheaper, it can feel as though Japan itself has lost value.

But if customers rush in the moment the price falls, that also means they wanted what was being offered even when it was more expensive.

The weak yen did not create Japan’s appeal.

It merely opened the tap on demand that already existed.

Many countries are cheaper than Japan.

People still board a plane and come all the way here.

Business is not so easy that lowering the price alone guarantees a rush of customers.