The Japanese Yen (JPY)

 

A Brief History of the Japanese Yen

The Japanese 'Yen' (meaning 'circle' or 'round object') was created in 1871 in order to centralise the currency of Japan after a number of other local currencies and Spanish Dollars were in circulation at the same time. The New Currency Act of 1871 changed that and the Japanese Yen has since remained the currency of Japan.

Operating under a bimetallic standard of gold and silver coins, the Japanese Yen’s value declined against many other currencies, notably the US dollar, until Japan also adopted the gold standard-only currency in 1897.

After WWII, the Japanese Yen lost most of its value and was fixed at ¥308 to the U.S. Dollar in 1949 as part of the Bretton Woods system of fixed exchange rates. This lasted until 1973 when it switched to a floating exchange rate.

Over the past four decades the Japanese Yen has appreciated considerably against the U.S. Dollar and other major currencies although the Yen softened during Japan’s asset price bubble, before appreciating substantially in the wake of the 2008 financial crisis.

Japanese Yen in the Foreign Exchange Market

The Japanese Yen is the third most traded currency in the world in the foreign exchange market accounting for around 19% of daily market trading volume. It is also the most traded currency in Asia.

The Japanese Yen trades most actively against the U.S. Dollar, with this pair typically known as Dollar Yen. Unlike other major currencies, the Japanese Yen lacks a popular nickname in the foreign exchange industry, so it is generally called simply the Yen or Japanese Yen.

Due to Japan’s relatively low interest rates, stable economy and good credit standing, the Yen is commonly considered a safe haven currency that tends to benefit in times of financial risks or geopolitical turmoil.

Various central and commercial banks keep Japanese Yen as a reserve currency, especially those located in Asia. The Yen ranks fourth as a global reserve currency, accounting for almost four percent of currency reserves held worldwide.

Fact Table:

Currency Name: The Japanese Yen
Currency Code: JPY
Currency Symbol: ¥
Central Bank: The Bank of Japan
Countries Used In: Japan
Major Unit: One Yen
Minor Unit: One Sen = 1/100 of one Yen
Note Denominations: ¥1000, ¥2000, ¥5000, ¥10,000
Coin Denominations:
¥1, ¥5, ¥10, ¥50, ¥100, ¥500
 

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