Travelling or sending money to Japan? AUD maintains upward trend against yen

For Australians planning a Christmas trip to Japan or sending money there, you’re in luck. With the Japanese yen continuing to drop in value, Aussies making an international money transfer (IMT) or taking out a travel card for their upcoming trip to Tokyo can look forward to more competitive exchange rates right now. 

This is according to IMT provider WorldFirst’s Senior Currency Specialist Conor Power, who said the Aussie dollar against the yen has grown stronger in the wake of Japan’s economy hitting a bump.

“AUD/JPY is up 5% since August and has maintained an upward trend since September with indications predicting this trend will continue,” Power said. 

“If we look at the USD/JPY currency pair which is seen as a key indicator of the yen’s performance, the pair looks set to hit 110 yen to the US dollar, something we have not seen for some time. Japanese export figures released as early as last week give further indication of the current economic pain points Japan is experiencing.”

“Consequently ultra-low interest rates and consistent poor data from Japan have led to a weaker Japanese yen, making it a great time for Aussies looking to send money to Japan.” 

Stronger exchange rates translates to more bang for your buck, as it means you can trade your Aussie dollars for a larger amount of yen. 

Mozo data shows that the average AUD/JPY exchange rate at the moment is 73.1764, which means for a AUD$10,000 transfer, you would be able to receive JPY¥731,764.*

AUD/JPY forecast shy of Christmas season

Looking ahead, IMT provider OFX's Treasury Manager Sebastian Schinkel said AUD/JPY rate fluctuations down the track will depend on a number of factors, including equity market movements and interest rate decisions by the Central Bank of Japan and the Reserve Bank of Australia (RBA). 

“Expect a higher AUD/JPY towards the end of the year if the S&P500 Index (US) and Euro Stoxx (EU) perform positively,” he said. 

“If equity markets turn around and underperform towards the end of the year (think no deal between US & China, equity markets in the red) expect AUD/JPY to trade lower and other safe havens like Gold and the Swiss Franc to trade stronger.” 

Schinkel added that if the RBA doesn’t cut rates come 5 November, then the AUD/USD exchange rate should (in theory) pick up and cause AUD/JPY to grow stronger as well, although this will depend on what’s happening with USD/JPY.

And according to Schinkel, it could also be better to exchange your Aussie dollars for yen during certain months of the year - specifically, March, October and November. 

“From a seasonality perspective, based on analysis against the last 5 and 10 years’ historic rates, the AUD/JPY cross tends to perform better historically in March, October and November.”

Travelling to Japan

With a range of travel money options around, it can be hard to decide which type of card will suit your trip to Japan. To help you pick the right option for you, here is a snapshot outlining the pros and cons of each: 

Prepaid travel card: 

• Pros: You can lock in exchange rates prior to travelling, which means you won’t have to worry about the Aussie dollar dropping while you’re away. Plus, prepaid travel cards make budgeting a lot easier since you’ll know exactly how much you’ve got to spend overseas. 
• Cons: Some cards charge international ATM fees, and if you do need to top up funds while you are away it can take up to 3 days for the funds to appear in the account. 

Credit card: 

• Pros: Credit cards are convenient and widely accepted around the world since most are linked to Visa, AMEX or Mastercard. Many travel credit cards also come with complimentary concierge services, and if you take out a premium or rewards card, chances are it also comes with free overseas travel insurance. 
• Cons: You won’t know what exchange rate you’ll be charged by your card provider until after your purchase so you could return home with a bigger bill than expected. Credit cards also tend to charge a foreign exchange margin on purchases which can be as much as 3.65%** so if you want to avoid paying these fees, check out our Mozo Experts Choice Award travel credit card winners. 

Debit card: 

• Pros: This is a cost-effective option, as you’re using your own money, so it’s great for those sticking to a tight budget while travelling. Just watch hefty overseas ATM and foreign exchange margins. To find out how much your debit card provider will charge you in overseas fees, try Mozo’s debit card fee finder tool.
• Cons: Some hotels and car rental agencies might not accept debit cards for pre-authorisations. And if you’re a rewards points lover, debit cards don’t come with the bells and whistles you might be looking for. 

Sending money to Japan

When sending money to Japan, you can use either a bank or a foreign exchange specialist. So which option is better? Let’s take a look: 

Banks: 

• Pros: It’s convenient, since you can use the bank you’re already with. 
• Cons: Poorer exchange rates and higher fees than competitive alternatives - a recent ACCC report revealed just how much the big banks have been overcharging Aussies for overseas money transfers. 

FX specialists: 

• Pros: Online IMT specialists offer more competitive exchange rates and lower fees than the big banks. Their transactions are safe and secure, and they also specialise in IMTs, so you’ll have access to expert insights into the foreign exchange market. 
• Cons: You’ll need an account set up and approved before you can send money to Japan with an FX specialist. So be sure to plan ahead rather than leave it till the day of the transfer.

Sending money to Japan or looking to convert your holiday funds to yen? Head over to our international money transfer comparison table to compare specialist foreign exchange providers and get started on finding a killer exchange rate today.  

*Data as of 28 October 2019.

**The highest foreign exchange margin in Mozo's database, as of 29 October 2019.