I posted earlier on China removing pandemic-related restrictions on group tours to more countries, including the U.S., Japan, South Korea and Australia.
MUFG has assessed one ramification of the easing of restrictions as being beneficial flows into yen.
Key Points:
- China’s Easing of Travel Restrictions: China recently revealed that it would be lifting restrictions on group travel to 78 countries, effective immediately. This is expected to lead to a significant resurgence in Chinese tourism abroad.
- Beneficiary Countries: Among the countries set to benefit from this decision are Japan, South Korea, Australia, Germany, the UK, and the US. These nations saw an immediate reaction in their tourism-linked stocks, especially airlines, which performed significantly well in markets that previously benefited from Chinese tourism.
- Japan to Benefit Notably: China’s tourists have always had a preference for Japan as a travel destination. Given the easing of restrictions, Japan is anticipated to see a significant boost in tourism inflow from China in the coming times.
- Supportive Flow Data for Yen: The recent data indicates a shift that favors the JPY. While this alone isn’t enough to predict a reversal in JPY’s direction, it’s a step in the right direction.
- A Potential Turn in JPY Depreciation: If evidence emerges of a US slowdown and market expectations adjust regarding Federal Reserve policy, the yen’s depreciation trend could reverse. In such a scenario, the balance of payments data would validate and bolster the JPY’s strength.
This
summary is via the folks at eFX.
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