On the 14th, the yen temporarily strengthened to the upper ¥140s per dollar, with the yen appreciating by more than ¥4 in a sharp move. Against the backdrop of indications that the Fed has finished raising rates and monetary policy in major economies, some expect a yen-strengthening, dollar-weakening phase next year. The possibility that this could affect the timing of overseas travel was highlighted.
Ahead of the overseas travel season, views on the US-Japan interest-rate differential on the 14th drove the yen higher, with the currency moving sharply from the ¥145-per-dollar range to the upper ¥140s. The move was attributed in part to indications that the Fed had effectively finished raising rates.
The Fed updated its outlook for the policy rate, prompting expectations that the number of rate cuts next year would rise from 2 to 3, and the stock market responded. Meanwhile, the rapid appreciation of the yen has drawn attention to overseas travel booking trends.
Travel industry participants say there has been no major change in bookings for now, but the appreciation of the yen could have an impact from next month onward if it continues.
Regarding the currency outlook, experts say that if the Bank of Japan ends negative interest rates in January next year and the yen moves to the low ¥130s per dollar around spring, it would be a "very good time" for overseas travel.
Tatsuya Goto (後藤達也) points out that wage growth and market stability are conditions for the Bank of Japan to end negative interest rates.