Keiji Kanda of Daiwa Institute of Research said that over the past year each 10%
depreciation of the yen versus the dollar has been a net drag on Japan's real
GDP of about 0.14 percentage point. While weaker yen can lift growth through
inbound tourism and an equity-wealth effect, those gains are concentrated in
travel companies and asset-rich elderly households; rising import costs have
imposed heavier burdens on most firms and households. Price pass-through, Middle
East tensions, Trump tariffs and a drop in Chinese tourists have also blunted
the yen’s typical positive impact. The yen remains near historic lows, trading
around 162.20 per dollar.
