Current State of Yen Depreciation: What Does a 53-Year Low Mean?
Between 2025 and 2026, the USD/JPY exchange rate broke through the 155 mark, reaching its lowest level in 53 years since the collapse of the Bretton Woods system in 1973. For ordinary consumers, this figure may be just a news headline, but for residents of Macau and Hong Kong, it represents a real and tangible redistribution of wealth.
Historical context: The last time the yen was at such a weak level was around the peak of Japan’s bubble economy in 1990. At that time, the yen came under pressure due to the rapid expansion of the asset bubble. This time, however, the situation is fundamentally different: the root cause lies in the structural divergence between U.S. and Japanese monetary policy, which is difficult to reverse in the short term.
From the perspective of the Macau pataca and the Hong Kong dollar, the current exchange rate has delivered a substantial increase in purchasing power:
- Macau pataca to Japanese yen: 1 MOP can be exchanged for approximately 19–20 yen (the historical normal level is around 14–15)
- Hong Kong dollar to Japanese yen: 1 HKD can be exchanged for approximately 19.8–20.2 yen (the normal level is around 14–15)
- Conversion example: A Japanese product priced at 10,000 yen now costs only about HKD 495–510, compared with approximately HKD 650–680 two years ago, representing savings of more than 25%
For consumers in Macau and Hong Kong, this is the most favorable yen exchange-rate window in nearly half a century. The question is: how long will this window remain open?
Root Cause of Depreciation: The Structural Contradiction in the U.S.-Japan Interest Rate Gap
To understand the depreciation of the Japanese yen, we must start with interest rate differentials. When there is a significant gap between the interest rates of two countries, capital naturally flows toward the higher-yielding side, putting depreciation pressure on the lower-yielding currency.
The Federal Reserve’s High Interest Rate Policy
To combat the wave of inflation following the pandemic, the Federal Reserve (Fed) began an aggressive rate-hiking cycle in 2022, raising the federal funds rate from near zero to a high level of 5.25–5.5%. Even though the market expects rate cuts to begin in the second half of 2025, the actual pace remains much slower than anticipated.
The Bank of Japan’s Commitment to Negative Interest Rates
At its monetary policy meeting in March 2024, the Bank of Japan decided to maintain its short-term interest rate at the negative level of -0.1% while continuing to implement quantitative easing (QE). This decision sharply disappointed the market and directly triggered a new round of rapid yen depreciation.
The YCC Yield Curve Control Mechanism
The Bank of Japan also maintained its Yield Curve Control (YCC) policy, artificially keeping the yield on 10-year Japanese government bonds below the 1% ceiling. This means that even though Japan’s inflation has risen above 3%, the central bank still does not allow long-term interest rates to rise freely.
This creates a dilemma:
- Japan’s inflation is rising, and interest rate hikes should be used in response
- However, raising rates too quickly would cause mark-to-market losses in the banking system, which holds a large amount of government bonds
- Japan’s government debt exceeds 260% of GDP, and higher interest rates would make fiscal sustainability difficult
- As a result, the central bank is forced to continue monetary easing, keeping the yen under sustained pressure
The U.S.-Japan interest rate gap is as high as approximately 5.35 percentage points (5.25% vs -0.1%), representing the largest interest rate differential in decades. This is the fundamental structural reason behind the yen’s rapid depreciation.
Impact on Travel to Japan (Macau/Hong Kong Perspective)
For consumers in Macau and Hong Kong, the most direct benefit of the weaker yen is the significant increase in purchasing power when shopping during trips to Japan.
Specific Figures on Increased Purchasing Power
Below is a practical conversion comparison based on the current exchange rate (USD/JPY around 155):
- Electronics: A Japanese-version Sony A7R V camera is priced at around JPY 550,000 in Japan, currently equivalent to approximately HKD 27,500, more than 15% cheaper than buying it in Hong Kong
- Cosmetics: SK-II Facial Treatment Essence 230ml sells for around JPY 24,000 at Japanese drugstores, equivalent to approximately HKD 1,200, 20–30% lower than the Hong Kong retail price
- Groceries: Hokkaido sashimi-grade scallops (1kg) can be purchased directly in Japan for around JPY 3,000, equivalent to approximately MOP 150, offering far better value than the local market
- Apparel: Uniqlo Premium Linen Shirt sells for JPY 3,990 in Japan, equivalent to approximately HKD 200, around 30% below the Hong Kong retail price
Recommended Timing for Currency Exchange
The current market is at a historically high level, but exchange rates fluctuate daily. A “staggered exchange” strategy is recommended:
- Exchange 60% of your travel budget at money changers in Macau or Hong Kong before departure
- After arriving in Japan, exchange the remaining 40% at the airport or a bank depending on the exchange rate
- Avoid exchanging currency at hotels or tourist attractions, where spreads are generally higher
- Make good use of credit cards that support real-time exchange rates, such as Wise or Revolut, as some purchases can be settled close to the bank mid-market rate
Which Products Are Most Worth Buying in Japan
Not all products become better value simply because of the weaker yen. The categories most worth buying in Japan include:
- Japanese domestic-brand electronics (Sony, Panasonic, Canon — excluding globally price-aligned products)
- Japan-exclusive cosmetics and drugstore products (Daiso, Matsumoto Kiyoshi)
- Wagyu and premium food ingredients (brought back directly or imported through B2B channels)
- Japanese sake and whisky (Yamazaki, Hibiki, and others still sell in Japan below international grey-market prices)
- Handicrafts and ceramics (Kyoto ware, Mashiko ware, and similar items whose pricing has not yet adjusted to exchange-rate movements)
According to forecasts from the Japan Tourism Agency, the number of foreign visitors to Japan is expected to exceed 40 million in 2026, with Macau and Hong Kong residents representing an important share of inbound travelers. The weaker yen is one of the key drivers behind this trend.
Impact on Imported Japanese Ingredients (Macau Restaurants and Retailers)
The depreciation of the Japanese yen has created an easily overlooked paradox for Macau’s food and beverage industry and retailers: procurement costs denominated in yen have fallen, but consumers may not necessarily see a clear reduction in prices.
Cost Structure Analysis of Imported Ingredients
Taking Japanese sea urchin (uni) as an example, assuming an FOB (Free on Board) price of JPY 15,000 per kilogram:
- Exchange rate one year ago (USD/JPY around 130): equivalent to approximately USD 115.4 per kilogram
- Current exchange rate (USD/JPY around 155): equivalent to approximately USD 96.8 per kilogram, representing a decline of around 16%
- However, costs denominated in USD or MOP, such as freight, cold-chain logistics, and Macau import duties, remain unchanged
- In addition, intermediaries often quote in fixed MOP prices, meaning exchange-rate benefits are often not passed directly on to end consumers
Market Dynamics for Hokkaido Scallops and Wagyu
Hokkaido scallops are subject to greater wholesale price fluctuations due to Japanese export restrictions and quality grading. The recent depreciation of the yen has improved exporters’ pricing competitiveness, helping increase supply to the Macau and Hong Kong markets. For wagyu, overseas prices for A5-grade beef are primarily benchmarked against international market pricing. In theory, lower domestic procurement costs in Japan can create higher margin potential for importers.
Supply Chain Perspective of Inari Global Foods
Inari Global Foods, which focuses on the B2B supply of premium Japanese seafood, has seen a structural improvement in its Hokkaido sea urchin procurement costs amid the depreciation of the yen. FOB purchases priced directly in yen translate into lower converted costs in HKD or MOP, helping stabilize supply quotations for high-end restaurant clients in Macau and Hong Kong. This also demonstrates the far-reaching impact of the yen exchange rate on the entire Japanese ingredient import ecosystem: from source fishing ports to the final dining table, the cost structure at every stage is quietly changing.
Retailers’ Response Strategies
For Japanese supermarkets and food retailers in Macau, the following actions are recommended during this exchange-rate window:
- Increase inventory of Japanese food products with a long shelf life, such as Japanese sake, sauces, confectionery, and snacks
- Negotiate with Japanese suppliers to lock in 6- to 12-month yen-denominated contracts
- Consider setting up a yen foreign-exchange reserve and converting funds in batches when exchange rates are favorable
Short-Term Outlook and Consumer Strategies
Volatility Forecast for the 155–160 Range
Most foreign exchange analysts expect USD/JPY to fluctuate within the 155–160 range in 2025–2026. Factors supporting continued yen weakness include: the Federal Reserve cutting rates more slowly than expected, the Bank of Japan requiring time to shift its policy stance, and Japan’s persistent trade deficit.
Risk of Bank of Japan Intervention
In 2022 and 2024, Japan’s Ministry of Finance directly intervened in the foreign exchange market several times by buying yen. Each intervention caused the yen to rise sharply by 3–5% in the short term. Consumers should watch for the following intervention signals:
- Verbal warnings from Ministry of Finance officials that “speculative fluctuations are unacceptable”
- USD/JPY approaching or breaking through the psychological 160 level
- The Bank of Japan convening an emergency meeting or signaling a policy shift
If intervention occurs, the exchange rate could rebound rapidly within a few days, at which point currency conversion costs would rise significantly.
Practical Consumer Advice: A Staggered Currency Exchange Strategy
Given exchange rate uncertainty, the following strategies can help reduce risk:
- Exchange in batches, not all at once: Divide the total planned exchange amount into 3–4 batches and exchange once every 2–4 weeks to average out costs
- Set target exchange rate alerts: Use a banking app or Google Finance to set target exchange rate notifications, and act immediately when the rate reaches your desired level
- Avoid large one-off currency exchanges: In particular, avoid exchanging large amounts around Bank of Japan policy meetings, as unexpected policy moves often trigger sharp single-day swings of 2–3%
- Make good use of multi-currency accounts: Platforms such as Wise and Charles Schwab allow users to hold yen at rates close to interbank levels, making them suitable for consumers planning multiple trips to Japan
- Book early to save on Japan travel: The earlier you lock in yen-priced portions of flights and hotels, the more cost-effective it can be. Booking 2026 trips now can still allow you to benefit from favorable exchange rates
Possibility of a Yen Rebound in 2026
The main triggers for a yen rebound would be: the Federal Reserve cutting rates by more than 200 basis points cumulatively from the second half of 2025 to 2026, or the Bank of Japan formally exiting its negative interest rate policy. A narrowing of the U.S.-Japan interest rate gap would support a yen recovery. Some institutions forecast that, under a policy normalization scenario, USD/JPY could fall back to the 140–145 range. This would mean the Hong Kong dollar to yen exchange rate could drop from the current level of around 20 to 16–17, reducing purchasing power by approximately 15–20%.
Therefore, for those planning travel to Japan or purchasing Japanese food ingredients, the exchange rate window in 2025 through the first half of 2026 is particularly valuable.
