With the yen strengthening to a three-year high against the dollar, U.S. troops and their families are doing more of their shopping on base after COLA dropped slightly at most military installations in Japan and Okinawa last week. (Christopher B. Stoltz / S&S)
With the Japanese yen strengthening to a three-year high against the dollar, U.S. servicemembers and their families are tweaking their off-base shopping habits after the cost-of-living allowance recently dropped slightly at most military installations in Japan and on Okinawa.
Many Americans say they’ll curb outings to malls, grocery stores and restaurants outside the gates until the U.S. greenback recovers.
But some analysts forecast the weak dollar trend to continue in the coming weeks.
“I’m kind of scared to go off base now,” said Airman Ian McGonigal, assigned to Yokota Air Base’s 374th Operations Support Squadron. “I don’t want to have to spend a few extra dollars every time I take yen out to go off base.”
On Friday, the dollar’s exchange rate climbed to 101 at military banking facilities in Japan and Okinawa after dipping to 100 a day earlier.
Petty Officer 1st Class Daryl Robinson said he usually does a lot of his shopping outside Sasebo Naval Base, but is reconsidering due to the exchange rate.
“Dollar for dollar it’s pretty steep,” Robinson said, adding he believes the downward trend will continue for the U.S. currency and could get much worse. “It’s going to push me more toward base.”
According to Bloomberg.com, the yen traded at 102.62 per dollar in New York on Monday, its strongest showing since Jan. 28, 2005. It sat at 102.79 early Friday afternoon.
The dollar may slip below 100 yen in the next two months as Japanese investors turn away from dollar-denominated assets, said Tomoko Fujii, head of Japan economics and strategy at Bank of America Corp. in Tokyo, in a Bloomberg report last week.
The surging yen has caused concern in Japan, where the country’s economic minister, Hiroko Ota, described the dollar’s decline as “abnormally rapid.”
Since the start of the year, it’s fallen more than 7 percent against the yen. That erodes Japanese exporters’ overseas earnings and makes their exports more expensive.
The dollar hasn’t dropped under 100 yen since November 1995, when it was rebounding from an all-time low of 79 set earlier that year.
McGonigal said the weakened dollar has affected his purchases, especially food items such as fish and some produce, which he buys off base.
“I filled out my COLA survey the other day,” McGonigal said, adding he hopes the allowance goes up soon to help compensate for the lower exchange rate.
The Defense Department’s Per Diem, Travel and Transportation Allowance Committee updates COLA up to twice a month. Rates are set about eight days before the effective date of the new allowance. March 16 is the earliest any change would occur.
“A safe assumption would be if the yen continues to strengthen against the dollar, it would trigger an adjustment to the COLA index,” said Army Lt. Col. Loren Darmofal, U.S. Forces Japan’s financial management officer.
This month, servicemembers with dependents in mainland Japan and on Okinawa can fill out a living pattern survey that details purchases on and off base. It’s available online until March 31 at http://www.perdiem. osd.mil/oscola/lps/japan/.
Petty Officer 1st Class Raymond Moreno said he’s single and does most of his shopping at the Sasebo base commissary, so the poor exchange rate doesn’t chew into his finances.
But families and sailors who aren’t as satisfied with shopping on base do suffer, he said.
“Guys who don’t like the selection here and don’t want to drive all the way to Hario (a remote housing complex) due to the gas prices, they see it pretty bad,” Moreno said.
Master Sgt. John Jaap, of Yokota’s 374th Communications Squadron, said any time the rate changes cut into his finances, he’s not happy.
“It definitely has had an effect on what we do off base,” he said.
Jaap said he doesn’t understand why the COLA rates decreased recently, especially since the dollar has continued losing value against the yen.
At Yokosuka Naval Base, Petty Officer 1st Class Jon Edmiston, a combat systems instructor for Afloat Training Group Western Pacific, says if the yen rate keeps dropping, so will his spending — but only slightly.
He suspects the sinking yen rate eventually will trigger another boost in COLA, “balancing each out,” he added.
“I’ll probably cut back a little, but no more than 20 percent,” he said. “There are just some things you can’t get on base — like good sushi.”
Stars and Stripes reporters Bryce S. Dubee, Travis J. Tritten and Chris Fowler and The Associated Press contributed to this story.
