Drop in value of Japanese yen might harm tourism in Hawaii

The U.S. dollar broke through the important 100-yen level Thursday for the first time in four years.

That may be good news for the export-centered Japa­nese economy, but it’s bad news for Hawaii’s tourism industry.

The U.S. dollar rose as high as 101.18 yen early today in Tokyo. It was the first time since April 2009 that the greenback has traded above 100 yen.

A weaker yen makes travel to Hawaii more expensive for the Japa­nese, Hawaii’s No. 1 foreign tourist market.

The drop in the yen’s value may have contributed to a 2.9 percent decline in Japa­nese visitors to Hawaii during the Golden Week string of national holidays from April 26 to May 6, according to Japan Airlines. The airline said it carried 26,573 passengers to Hawaii from Japan over the recently concluded holidays.

A stronger U.S. economy and efforts by Japan to lower the value of the yen have led to the weakening.

"Signs of an improving U.S. job market have finally chipped away and made a difference against the yen," said Joe Manimbo, a market analyst at Western Union Business Solutions, a unit of Western Union Co. "We’ve seen these brightening prospects for the U.S. job market, a burst of news last week with the payrolls number, and again today with the weekly jobless claims tally."

Japan’s currency will be at 104 per dollar at year’s end, according to the median of more than 50 economist estimates compiled by Bloomberg News.

David Uchiyama, vice president of brand management for the Hawaii Tourism Authority, said he is watching the yen’s movements with concern.

"We monitor numerous variables when it comes to the sustainability and success of tourism for the state," Uchi­yama said. "The currency exchange rate, as well as fuel surcharges and global economic stability, are all factors. We continue to work with our industry partners to balance our efforts with these factors in mind in order to ensure that our tourism economy remains stable and sustainable."

After years of Japan’s struggling to turn its faltering economy around, Prime Minister Shinzo Abe has made beating deflation a central point of his economic policy since taking office in late December.

Last month the Bank of Japan announced a decisive break with its earlier policies. Instead of focusing on keeping overnight interest rates close to zero — which seemed to be having little effect in reviving growth — the central bank aimed to double the amount of money in circulation, seeking to produce annual inflation of about 2 percent.

That policy now seems to be bearing fruit as money pouring into the economy weakens the yen against the dollar and other world currencies. The yen’s move is germinating inflation in an economy that has long been moribund, in the process delivering a competitive boost to the country’s big exporters.

The Japanese government is not overtly targeting a lower yen rate — something that could raise tensions with other exporting nations like the United States. And while the lower yen is good for Japan’s exporters, it may be less good news for U.S. exporting companies.

Nevertheless, the promise to drastically change Japan’s economic policy and end the long, debilitating era of deflation has caused the dollar to rally for much of this year, and finally break through the 100-yen level.