The chart below presents key movements in the Korean won (KRW) exchange rate against major global currencies from 2022 to 2025, offering essential insight into how currency trends have influenced Korea’s outbound tourism market. During this period, the KRW depreciated against most major currencies, including the USD, EUR, SGD, and THB – an environment that generally increases the cost of international travel for Korean consumers. Despite this overall depreciation, Japan emerged as a notable exception: the KRW strengthened against the Japanese yen, reflecting the yen’s persistent structural weakness.
This unusual divergence played a decisive role in shaping outbound travel flows. The sharp decline in the yen reduced the effective cost of visiting Japan and increased Korean travelers’ purchasing power across tourism categories such as accommodation, dining, transportation, and retail shopping. As a result, Japan solidified its position as one of the most attractive and price-competitive destinations for Korean travelers in the post-pandemic years.
Conversely, destinations linked to currencies where the won weakened – especially the United States, Europe, and Southeast Asia – experienced higher travel costs, reducing demand elasticity and softening outbound growth. By 2024–2025, a clear currency gap drove substitution effects:
- JPY: KRW strength → travel to Japan surged
- USD, EUR, SGD, THB: KRW weakness → higher travel prices
- TWD, MYR, IDR, VND: moderate volatility with mild upward cost pressure
These exchange-rate dynamics redirected Korean outbound tourism toward more affordable destinations, particularly Japan.
Outbound Tourism Response to KRW Movements
Tourism demand generally follows exchange-rate elasticity, where a depreciation of the home currency tends to suppress outbound travel. In Korea’s case:
1. KRW Depreciation vs Most Currencies → Lower Outbound Elasticity
As the won weakened against the USD, EUR, SGD, and THB, outbound travel to long-haul and higher-cost destinations became more sensitive to price changes. Historical patterns suggest:
- Elasticity is higher for discretionary, long-haul trips (e.g., US, Europe):
→ KRW depreciation typically leads to a proportionally larger decline in visitor numbers. - Elasticity is lower for close-distance or VFR (visiting friends/relatives) markets:
→ e.g., Taiwan, Southeast Asia.
2. KRW Appreciation vs JPY → Positive Elasticity for Japan
When the won strengthens against the yen:
- real travel cost drops
- shopping and discretionary spending become more attractive
- substitution effect occurs (Japan becomes cheaper relative to Korea’s other options)
3. Combined Effect
Thus, the 2022–2025 period can be summarized as:
- General KRW weakness → outbound travel suppressed
- Exception: Japan (JPY structural weakness) → outbound sharply increased
