Japan’s yen pain is Southeast Asia’s economic gain

Support us Yen's collapse is viewed favorably across much of Southeast Asia. Image: YouTube Screengrab The Japanese yen’s collapse through mid-2026 has become one of the most consequential disruptions to hit global financial markets in decades. The currency has slid past 162 yen to the US dollar, its weakest level since 1986 — a sharp reversal from its 1995 peak of about 80 yen per dollar. Japan’s real effective exchange rate (REER) has fallen to its lowest point in more than 50 years, a sign that the yen’s decline reflects deep structural forces rather than a temporary market swing. The fallout has reached far beyond Japan’s shares, redrawing economic fortunes across Southeast Asia. The region has emerged as a net beneficiary of the yen’s slide — from lower debt-servicing costs on yen-denominated loans to a surge in Japanese investment and tourism — even as the same forces expose it to the risk of a sudden reversal should the yen’s decades-long carry trade unwind. Several factors have driven the sharp depreciation. Chief among them is the persistent interest-rate gap between Japan and other advanced economies, particularly the United States.

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