Australians visiting Japan are seeing their trips get even cheaper as the Australian dollar hits a four-decade high against the Japanese yen, foreign exchange analysts say.
The Australian dollar strengthened against Japan’s currency on Monday, buying 110.79 yen — a high not seen since 1986, according to NAB’s Head of FX Strategy, Ray Attrill.
Australia’s exchange rate with Japan has grown increasingly favourable to tourists, which have surged to record numbers and topped more than one million visitors in 2025.
“It’s probably the cheapest place in the developed world, basically, [for Australians] to take a holiday,” Mr Attrill said.
“From an affordability point of view, Japan has never been cheaper for Australian tourists.”
Analysts said the currency movements partly reflected momentum for the Australian dollar, which has performed well against the US dollar this year.
While the Australian dollar was buying 109.2 yen by today, the rate remained high compared to recent decades, Mr Attrill said.
CBA economist and currency strategist Carol Kong said the build-up in anticipation ahead of this month’s interest rate hike also played a role in the strengthening dollar.
“That really drove the Aussie dollar up and in turn, that supported the Aussie dollar against the Japanese yen,” she said.
“You have to go back to the 1990s to see Aussie yen trading at this current level. It is definitely historically strong.”
It was also no coincidence the Australian dollar reached its multi-decade high against the yen following the landslide election victory on Sunday led by Japan’s prime minister Sanae Takaichi, who has signalled she will loosen government spending, Mr Attrill said.
Sanae Takaichi led her party to a resounding win, increasing its share of seats in parliament.
 (Reuters: Kim Kyung-Hoon)
Ms Takaichi’s fiscal plans had raised concerns about Japan’s debt burden, analysts said.
“That has been unnerving to the bond market in recent months, and it’s also been showing up in a weaker currency,” Mr Attrill said.
Currency dilemma facing Australian tourists
A record 1.06 million Australian travellers visited Japan in 2025 — the first time numbers broke the one million mark, the Japan National Tourism Organization said in January.
About 42.7 million tourists flocked to Japan in 2025, an all-time high, topping 2024’s record of nearly 37 million as the weak yen boosted the appeal of the “bucket list” destination.
The influx of tourists has even led to warnings from Japanese authorities of “over-tourism” — and even the cancellation of Japan’s cherry blossom festival in Fujiyoshida.
Japan’s cherry blossom festival cancelled
The strengthening dollar would increase the purchasing power of Australians visiting Japan, foreign exchange analysts said.
“But the question is, is it going to get even cheaper [to visit]?” Mr Attrill said.
“[Potential tourists] have got the challenge of knowing whether they should book and pay for their holiday next year, now.”
Mr Attrill said at the moment, there was no sign of a turn in the Australian dollar’s uptrend against the yen.
Ms Kong also expected the Australian dollar to remain strong against the yen.
“Just bear in mind that it is a very volatile currency and it wouldn’t be surprising to see [the dollar-yen cross exchange] higher or lower than what we currently forecast,” she said.