Housewives are dumping cash into foreign currencies as an investment.

The yen's recent surge against major currencies - including to a 13-year high against the dollar - is battering Japan's vital exporters, but consumers here are enjoying some of the benefits that come with a strong currency, snapping up bargain deals on everything from French wine to designer handbags.

Tokyo housewife Natsuko Ouka recently converted some of her yen savings into dollars - even though she has no plans to go overseas - betting that the weakened dollar will eventually recover.

'It's so low right now, I'm doing it as an investment, though I'm not telling my husband,' said Ouka as she ate lunch with her young daughter at a restaurant.

As the scope of the US financial crisis became clear over the last few months, investors scrambled to sell dollars and jump into yen as a safe haven, because Japan's banks and economy looked comparatively solid.

Other investors bailed out of so-called yen carry trades that involved borrowing the yen to invest in other, higher-yielding assets in Australia and elsewhere. Repaying those yen loans also lifted the Japanese currency's value.

Since mid-September, the yen has gained about 23 per cent against the dollar. The US currency earlier this week fell to 87.11 yen (S$1.42), its lowest since July 1995.

Over the same three months, the yen has also gained 22 per cent against the euro and 35 per cent against the South Korean won.

That's dealt more pain to exporters like Toyota Motor Corp. and Sony Corp. - suffering from waning global consumer demand - because a weaker dollar erodes their foreign income.

Toyota, for example, says its operating profit falls 40 billion yen (S$654 million) for every yen the dollar declines. Overall, it's a big drag on the country's economy, already in recession.

Still, Japan's consumers are taking advantage of the positives offered by the yen's gains.

Shoppers that enter an Aeon department store in central Tokyo are greeted by huge 'Strong Yen Sale!' signs, with a large display of discounted foreign wines and champagne near the entrance.

It has also marked down items like foreign-made business shoes, Australian beef and imported tuna by 25 per cent.

Major travel agency HIS says the strong yen and lower fuel surcharges have helped lift the number of year-end holiday trips overseas despite the weakening economy. Tickets and tours booked through November are up 3 per cent, with tickets and trips to South Korea up 50 per cent from last year.

Motohiro Kato, 31, recently browsed travel flyers outside of an HIS shop in Tokyo. He is planning a year abroad in Australia from next September, but having watched the yen gain over 40 per cent against the Australian dollar over the last three months, said he won't wait and soon plans to convert about 100,000 yen into Australian dollars.

'I love to travel, and this is a big chance,' he said.

Long lines have formed at currency changers throughout Tokyo as locals convert their newfound wealth into other currencies.

Chizuru Watabe, who has worked in the city exchanging currency for the last five years, said she has never seen anything like it.

People appeared carrying envelopes stuffed with cash, looking to exchange 1,000,000 yen or more.

'Some said they were planning to travel in the next few months, but others were changing over their personal savings,' she said, adding that on several occasions her company completely ran out of euros.

While companies are benefiting from the extra buying power for oil and raw materials, that's not enough to offset falling sales.

And economists warn that the slowdown in Japan's economy bodes poorly for consumers as companies cut jobs and freeze wages.

'There are some positives from a stronger yen, including imported good prices. But it doesn't raise the disposable income for Japanese people,' said Masafumi Yamamoto, the head of foreign exchange strategy at Royal Bank of Scotland in Tokyo.

Mr Yamamoto expects the dollar to fall to 85 yen in the next few weeks. It was near 89 yen Friday.

Still, Mr Kato, who is planning the trip to Australia next year, said the yen's strength is an opportunity whichever way it goes in the short term.

'I still remember when my sister was in San Francisco 20 years ago and it was 270 yen to the dollar.' -- AP