For the last couple of months, the world has taken notice of Japan. Ever since Shinzo Abe and the Liberal Democratic Party took power in the last Japanese election, they’ve been pushing a new set of economic policies nicknamed “Abenomics,” a word somehow even less catchy in Japanese than English.

Part of Abenomics has been the weakening of the yen. The yen has been losing value steadily for the last few months, and last week, it even briefly reached ¥100 = $1 USD. Nothing special happens if the exchange rate hits that mark, but it’s symbolically significant. Nice, round, even numbers always make people happy.

Beyond the significance of a ¥100 to $1 exchange rate, there are lots of implications to a weak yen. A lot of people automatically assume that a weak yen is a Bad Thing. After all, it’s weak! Weak is bad, right? It’s a little more complicated than that.

We’ve talked before about the bigger implications of Abenomics but, frankly, I’m sure not many of you care that much. You’re probably not an economist, and not a lot of this affects you directly.

So I thought it might be helpful to take a look at how ordinary people are affected by Abenomics and the weak yen.

To a Foreigner

Chances are, if you’re reading this you probably live outside of Japan. In that case, good news! The weak yen is pretty much an all-around Good Thing for you. Foreigners, for the most part, benefit a lot from the weak yen.

Let’s say that you like to buy things from Japan, whether it’s a book, CD, skein of yarn or anything else. A weak yen means that these things are going to be relatively cheaper for you, so you’ll be able to buy more of your precious, precious anime.

If you’re planning on visiting Japan sometime in the near future, then even better! A weaker yen probably works in your favor. As you exchange the currency from your home country into yen, the exchange rate should favor you and give you more bang for the buck.

The only bad situation for a foreigner that I can think of is if your business depends on people in Japan buying your product. A weak yen means that the exchange rate hurts Japanese people trying to buy foreign products, but I imagine that this applies to few people reading this.

To Somebody Living in Japan

If you’re living in Japan, then the weak yen is kind of a mixed bag. The yen you earn in Japan is worth less abroad, so importing things from overseas is more expensive. Good luck getting those exotic Western animation DVDs!

But the weak yen can also be beneficial to people in Japan. If you work for a company that relies on exporting things outta Japan, then good news—people abroad will be able to buy more of your products since they’re (relatively) cheaper.

This is pretty common. Japan’s economy has historically been export-based, so many Japanese companies benefit from the weak yen. You can see some of the positive effects on Japanese companies as the Nikkei has steadily risen in the last few months.

Where Does It Go From Here?

In a nutshell, that’s how the weak yen should affect you right now.

But this is an incredibly simplified overview of the weakening of the yen. As its value goes down more and more, its more complicated effects will emerge. And who knows? In a few months, the story of the yen might make us all wonder what the hell a Bitcoin is.

Header photo by epSos.de