Shouldn’t mass tourism to a country affect and boost their exchange rate?

Question

The Japanese Yen keeps tumbling, and there’s a lot of factors that go into that. But shouldn’t the massive number of people visiting Japan and buying yen help boost their currency?

In: Economics

Answer 1

It depends how much percentage of the country’s entire GDP is tourism. For tourism-heavy countries, perhaps. But for Japan, and if statista is correct with their sources, Japan’s tourism only accounts for around 1% of the country’s GDP (international tourism, which I assume is what you’re referring to, and not domestic tourism which just circulates the money around). So even if tourism exploded in Japan, it’s still a drop in the bucket for the entire country’s GDP, which influences the strength of the currency.