TOKYO - A prolonged slide in the yen is no longer being felt only through higher import prices, but is increasingly reshaping decisions by workers, investors, and foreign laborers, raising questions about Japan’s economic direction as the country heads toward a House of Representatives election.
Despite stock prices hovering near record highs, supported in part by improved earnings at export-oriented firms, many households say the benefits of a weaker currency are difficult to feel in daily life, as rising costs for food, fuel, and other essentials continue to erode purchasing power. The yen recently weakened to the 156-per-dollar range, reinforcing concerns that currency depreciation is feeding inflation without delivering broad-based gains in wages or living standards.
Comments by Prime Minister Takaichi that were perceived by markets as tolerant of yen weakness triggered political backlash, with opposition parties arguing that depreciation simply deepens household hardship, while the government has stressed that its goal is to build an economy resilient to exchange-rate fluctuations rather than one dependent on a weak currency.
Beneath the political debate, a gradual “Japan exit” is unfolding. Younger Japanese workers are increasingly choosing to work overseas, attracted by higher wages that are magnified when converted into yen, while some opt to keep their savings in foreign currencies in anticipation of further depreciation. Examples highlighted include workers in Australia and Canada who reported earning significantly more than in Japan, saving hundreds of thousands of yen per month, and deliberately holding assets in foreign currencies rather than converting them back into yen.
The weak yen is also undermining Japan’s appeal to foreign workers, particularly those sending remittances home. For migrant workers from Southeast Asia, the same amount of yen now translates into less value for families abroad than when they first arrived, diminishing one of the key incentives for working in Japan. Employers warn that if the trend continues, Japan could struggle even more to attract and retain overseas labor at a time of chronic workforce shortages.
Capital outflows are quietly accelerating as well. Individual investors are shifting funds toward foreign equities, particularly U.S. stocks, citing stronger growth prospects, scale, and productivity, while reducing exposure to Japanese shares. This movement, described as a form of capital flight, reflects doubts that the yen will recover meaningfully and skepticism about Japan’s long-term growth potential.
Concerns are also spreading through the government bond market. Long-term and super-long Japanese government bond yields have climbed sharply, reaching levels not seen in decades, amid reports that major global asset managers have pulled back from buying long-dated bonds. Market participants say the speed of the moves is unusual for Japan and reflects growing unease about fiscal policy, particularly election-season promises such as consumption tax cuts that could worsen the country’s already heavy debt burden.
The effects of yen weakness extend beyond households and markets, touching even elite athletes training overseas, who face rising costs in foreign currencies while earning in yen, forcing some to dip into savings or seek external support to continue competing at the highest level.
Analysts note that the traditional narrative that a weak yen automatically benefits Japan has become far less convincing. Many companies moved production overseas during past periods of yen strength and now reinvest profits abroad, meaning export earnings do not necessarily flow back into the domestic economy or translate into higher wages. As a result, yen depreciation can persist without delivering the growth or income gains once expected.
As voters approach the election, the central question is whether policies emphasizing proactive fiscal spending can realistically revive domestic investment and wage growth without undermining confidence in Japan’s fiscal discipline, at a moment when global markets are increasingly scrutinizing the country’s currency, bonds, and long-term economic credibility.
Source: TBS
