And even the cheap prices of imports are a mixed blessing: Falling prices on goods deepen the nation's stubborn deflation, keeping shoppers on the sidelines with expectations that prices will fall further and eroding corporate profits.
"In theory, a strong yen can enhance the consumer's purchasing power and prop up consumption and the economy as a whole," says Hiromichi Shirakawa, a Credit Suisse economist. "But given that the economy relies nearly entirely on exports to realize growth right now, it's hard to paint this as a pretty story."
Many Japanese retailers are enticing customers with "strong-yen rebate" sales, offering discounts on imported goods. They hope to buttress sales hurt by lingering pessimism over job security, driven in part by Japanese exporters moving jobs overseas in response to the stronger yen.
Hiroko Isobe, a 48-year-old employee of a financial firm, saw a newspaper ad for the sale and came to buy a pair of sneakers. She ended up with four pairs for just more than 5,000 yen in all, about $60. "I didn't know about the additional 10% discount," said Ms. Isobe. "It helps me a lot." Big supermarket operators Ito-Yokado Co. and Aeon Retail Co. are discounting imported groceries such as Australian beef and American broccoli.
Even imported pets are getting a boost. "We can buy more animals now because each one is cheaper," says Koichiro Okuhira, president of Science Factory, an Osaka firm that imports rare animals that it sells to people and leases to businesses such as ad agencies.
Mr. Okuhira says business is booming in snakes, iguanas and, particularly, tortoises from Indonesia and the U.S. "They don't bark and can be raised in apartments with no-pet policies," he says. With a tortoise selling for 10,000 yen on average this year, down from 15,000 yen last year, he says the company is on track to sell 4,000 tortoises this year, twice as many as last year.
Global Property Inc. recently held a seminar in Tokyo on purchasing condominiums in Kuala Lumpur as an investment. The brokerage company also recommends condominiums in Hawaii, citing sharp declines in the U.S. property market in addition to the strong yen. In the second quarter, when the yen began its latest rise, Japanese residents also became net buyers of real estate abroad after being net sellers for two years, figures from the Ministry of Finance show.
Kyoko Satake, a 52-year-old housewife, traveled to Hawaii in September for her niece's wedding. She bought a Marc Jacobs watch for her daughter, paying a little more than $200, half what she would have paid in Japan. She thinks she saved even more by using her credit card to get a better exchange rate, because the yen kept appreciating during her trip.
Tsutomu Fujita, a 33-year-old freelance photographer, has bought photography supplies online from New York retailer B&H Foto & Electronics Corp. "I can save a lot even after paying for shipping and import tariffs," says Mr. Fujita, who saves on shipping costs by pooling orders with friends. He is weighing making his biggest online purchase yet: a $1,900 lens that would cost 200,000 yen ($2,380) in Japan.
The yen value of dollar-based payments he receives from a foreign wire service has fallen nearly 30% in four years. "It would cause me a problem if the yen appreciates too much more," he says. As his experience shows, the strong yen's benefits look small compared with the damage suffered by the economy by damped export earnings and deepening deflation.
The consumer-price index in central Tokyo fell 0.5% from a year earlier in October. Leading the decline were furniture and household items, most imported from China and other Asian countries. Mr. Shirakawa, the Credit Suisse economist, says that over the long term, the yen's rise could help strengthen the economy if people and companies increase overseas investment. But following steep drops in financial markets world-wide earlier this year, ordinary Japanese investors, like their peers elsewhere, remain risk-averse, and their interest in investing in foreign financial assets, such as mutual funds targeting international stocks, is muted. (The Wall Street Journal)