Japanese yen

Japanese yen

日本円 (Japanese)
2000 yen note printed Shureimon The 6 types of coins of the Japanese yen
ISO 4217
Code	JPY (numeric: 392)
Unit
Unit	yen
Plural	The language(s) of this currency do(es) not have a morphological plural distinction.
Symbol	¥‎
Denominations
Banknotes
Freq. used	¥1,000, ¥5,000, ¥10,000
Rarely used	¥2,000
Coins
Freq. used	¥1, ¥5, ¥10, ¥50, ¥100, ¥500
Demographics
User(s)	Japan
Issuance
Central bank	Bank of Japan
Website	boj.or.jp
Printer	National Printing Bureau
Website	npb.go.jp
Mint	Japan Mint
Website	mint.go.jp
Valuation
Inflation	2.6% (December 2023)
Source	Statistics Bureau of Japan[1]

USD/JPY exchange rate 1971–2023

The yen (Japanese: 円, symbol: ¥; code: JPY) is the official currency of Japan . It is the third-most traded currency in the foreign exchange market, after the United States dollar and the euro.^[2] It is also widely used as a third reserve currency after the US dollar and the euro.

The New Currency Act of 1871 introduced Japan's modern currency system, with the yen defined as 1.5 g (0.048 troy ounces) of gold, or 24.26 g (0.780 troy ounces) of silver, and divided decimally into 100 sen or 1,000 rin. The yen replaced the previous Tokugawa coinage as well as the various hansatsu paper currencies issued by feudal han (fiefs). The Bank of Japan was founded in 1882 and given a monopoly on controlling the money supply.^[3]

Following World War II, the yen lost much of its prewar value. To stabilize the Japanese economy, the exchange rate of the yen was fixed at ¥360 per US$ as part of the Bretton Woods system. When that system was abandoned in 1971, the yen became undervalued and was allowed to float. The yen had appreciated to a peak of ¥271 per US$ in 1973, then underwent periods of depreciation and appreciation due to the 1973 oil crisis, arriving at a value of ¥227 per US$ by 1980.

Since 1973, the Japanese government has maintained a policy of currency intervention, so the yen is under a "dirty float" regime. The Japanese government focused on a competitive export market, and tried to ensure a low exchange rate for the yen through a trade surplus. The Plaza Accord of 1985 temporarily changed this situation; the exchange rate fell from its average of ¥239 per dollar in 1985 to ¥128 in 1988 and led to a peak rate of ¥80 against the US$ in 1995, effectively increasing the value of Japan's GDP in dollar terms to almost that of the United States.^[4]

Since that time, however, the world price of the yen has greatly decreased, falling to an average of almost ¥150 per dollar in November 2023 (before recovering a little).^[5] The Bank of Japan maintains a policy of zero to near-zero interest rates and the Japanese government has previously had a strict anti-inflation policy.^[6] From late 2021 to late 2023, the yen depreciated against the dollar by about 40%,^[7][5] giving rise to serious concern in Japan about long-term prospects for the currency.^[8][9][10] However, this weakness has had some benefits for Japan's tourism industry, as the low exchange rate makes its purchasing power attractive for travellers, particularly those from foreign nations.^[11][12]

Pronunciation and etymology

The name, "Yen", derives from the Japanese word Template:Nihongo krt, which borrows its phonetic reading from Chinese yuan, similar to North Korean won and South Korean won. Originally, the Chinese had traded silver in mass called sycees, and when Spanish and Mexican silver coins arrived from the Philippines, the Chinese called them "silver rounds" (Chinese: 銀圓; pinyin: yínyuán) for their circular shapes.^[13] The coins and the name also appeared in Japan. While the Chinese eventually replaced 圆; 圓 with 元,^{[lower-alpha 1]} the Japanese continued to use the same word, which was given the shinjitai form 円 in reforms at the end of World War II.

The spelling and pronunciation "yen" is standard in English, because when Japan was first encountered by Europeans around the 16th century, Japanese /e/ (え) and /we/ (ゑ) both had been pronounced [je] and Portuguese missionaries had spelled them "ye".^{[lower-alpha 2]} By the middle of the 18th century, /e/ and /we/ came to be pronounced [e] as in modern Japanese, although some regions retain the [je] pronunciation. Walter Henry Medhurst, who had neither been to Japan nor met any Japanese people, having consulted mainly a Japanese-Dutch dictionary, spelled some "e"s as "ye" in his An English and Japanese, and Japanese and English Vocabulary (1830).^[15] In the early Meiji era, James Curtis Hepburn, following Medhurst, spelled all "e"s as "ye" in his A Japanese and English dictionary (1867); in Japanese, e and i are slightly palatalized, somewhat as in Russian.^[16] That was the first full-scale Japanese-English/English-Japanese dictionary, which had a strong influence on Westerners in Japan and probably prompted the spelling "yen". Hepburn revised most "ye"s to "e" in the 3rd edition (1886)^[17] to mirror the contemporary pronunciation, except "yen".^[18]

Coins and banknotes

Coins

The obverse side of all coins shows the coin's value in kanji as well as the country name (through 1945, Dai Nippon (大日本, "Great Japan"); after 1945, Nippon-koku (日本国, "State of Japan") (except for the current 5-yen coin with the country name on the reverse). The reverse side of all coins shows the year of mintage, which is not shown in Gregorian calendar years, but instead in the regnal year of the current emperor's reign. Royal portraits have never appeared on Japanese coins, as the image of the emperor remains sacred.^[19]

• Coins minted in 1900 bear the year 明治 (Meiji) 33, the 33rd year of Emperor Meiji's reign
• Coins minted in 1920 bear the year 大正 (Taisho) 9, the 9th year of Emperor Taisho's reign
• Coins minted in 1980 bear the year 昭和 (Showa) 55, the 55th year of Emperor Hirohito's reign
• Coins minted in 2000 bear the year 平成 (Heisei) 12, the 12th year of Emperor Akihito's reign
• Coins minted in 2020 bear the year 令和 (Reiwa) 2, the 2nd year of Emperor Naruhito's reign

Rin

One rin coin from 1873 (year 6 of Meiji)

Bronze coins worth one-one thousandth of a yen called "Rin" were first introduced in 1873. One rin coins were very small measuring 15.75 mm in diameter, and co-circulated with mon coins of the old currency system. Their small size eventually was their undoing as the rin was abandoned in 1884 due to unpopularity. Five rin coins worth one-two hundredth of a yen also used a bronze alloy. These were successor coins to the equally valued half sen coin which had been previously minted until 1888. The decision to bring back an equally valued coin was in response to rising inflation caused by World War I which led to an overall shortage of subsidiary coins. The mintage period for five rin coins was brief as they were discontinued after only four years of production due to their sharp decline in monetary value. The overall demand for subsidiary coinage ended as Japan slipped into a post-war recession. Coins worth 1 and 5 rin were eventually officially taken out of circulation at the end of 1953 and demonetized.

Sen

50 sen coin from 1870 (year 3 of Meiji)

Subsidiary coins of "sen" were initially introduced in 1870 with a silver alloy in denominations of 5, 10, 20 and 50 sen. Copper sen coins in denominations of half, 1, and 2 came three years later, as Japan acquired the technology needed to mint them. The removal of silver from sen coinage began in 1889, when Cupronickel 5 sen coins were introduced. By 1920, this included cupro-nickel 10 sen and reduced-size silver 50 sen coins. Production of latter ceased in 1938, after which a variety of base metals were used to produce 1, 5 and 10 sen coins during the Second World War. While clay 5 and 10 sen coins were produced in 1945, they were not issued for circulation. As with the Rin, coins in denominations of less than 1 yen became invalid at the end of 1953 and were demonetized due to inflation.

Yen

Early 1-yen coin, 26.96 grams of 90% fine silver, Japan, Meiji year 34 (1901)

20 yen coin from 1870 (year 3 of Meiji)

In 1897, the silver 1 yen coin was demonetized and the sizes of the gold coins were reduced by 50%, with 5, 10 and 20 yen coins issued.

After the war, brass 50 sen, 1 and 5 yen were introduced between 1946 and 1948. The current-type holed brass 5 yen was introduced in 1949, the bronze 10 yen in 1951, and the aluminum 1 yen in 1955.

In 1955 the first unholed, nickel 50 yen was introduced. In 1957, silver 100 yen pieces were introduced, followed by the holed 50 yen coin in 1959. These were replaced in 1967 by the current cupro-nickel 100 yen along with a smaller 50 yen.^[20]

In 1982, the first cupronickel 500 yen coin was introduced. Alongside with the 5 Swiss franc coin, the 500 yen coin is one of the highest-valued coin to be used regularly in the world, with value of US$4.5 (As of October 2017). Because of its high face value, the 500 yen coin has been a favorite target for counterfeiters, resulting in the issuance in 2000 of the second nickel-brass 500 yen coin with added security features. Continued counterfeiting of the latter resulted in the issuance in 2021 of the third bi-metallic 500 yen coin with more improvements in security features.

Currently circulating coins[21]
Image	Value	Technical parameters				Description			Date of first minting
		Diameter	Thickness	Mass	Composition	Edge	Obverse	Reverse			¥1	20 mm	1.5 mm	1 g	100% aluminium	Smooth	Young tree, state title, value	Value, year of minting	1955		¥5	22 mm	1.5 mm	3.75 g	60–70% copper 30–40% zinc	Smooth	Ear of Rice, gear, water, value	State title, year of minting	1949 (rarely)[22]	1959		¥10	23.5 mm	1.5 mm	4.5 g	95% copper 3–4% zinc 1–2% tin	Reeded	Phoenix Hall, Byōdō-in, state title, value	Evergreen tree, value, year of minting	1951 (rarely)[22]	Smooth	1959		¥50	21 mm	1.7 mm	4 g	Cupronickel 75% copper 25% nickel	Reeded	Chrysanthemum, state title, value	Value, year of minting	1967[lower-alpha 3]		¥100	22.6 mm	1.7 mm	4.8 g	Cupronickel 75% copper 25% nickel	Reeded	Cherry blossoms, state title, value	Value, year of minting	1967[lower-alpha 4]		¥500	26.5 mm	1.85 mm	7.2 g	Cupronickel 75% copper 25% nickel	Lettered	Paulownia, state title, value	Bamboo, Mandarin orange, Value, year of minting	1982		¥500	26.5 mm	2 mm	7 g	(Nickel-brass) 72% copper 20% zinc 8% nickel	Reeded slantingly	Paulownia, state title, value	Bamboo, Mandarin orange, Value, year of minting	2000
	¥500	26.5 mm	1.81 mm	7.1 g	Bi-metallic (75% copper 12.5% zinc 12.5% nickel)	Reeded helically	Paulownia, state title, value	Bamboo, Mandarin orange, Value, year of minting	2021

Due to the great differences in style, size, weight and the pattern present on the edge of the coin they are easy for people with visual impairments to tell apart from one another.

Commemorative coins have been minted on various occasions in base metal, silver and gold.^[25] The first of these were silver ¥100 and ¥1,000 Summer Olympic coins issued for the 1964 games. The largest issuance by denomination and total face value were 10 million gold coins of ¥100,000 denomination for the 60th anniversary of reign of the Shōwa Emperor in 1986, totalling ¥1 trillion and utilizing 200,000 kg fine gold. ¥500 commemorative coins have been regularly issued since 1985. In 2008 commemorative ¥500 and ¥1,000 coins were issued featuring Japan's 47 prefectures. Even though all commemorative coins can be spent like ordinary (non-commemorative) coins, they do not normally circulate, and ¥100,000 coins are treated with caution due to the discovery of counterfeits.^[26]

The 1 yen coin is made out of 100% aluminum and can float on water if placed correctly.

Banknotes

The issuance of yen banknotes began in 1872, two years after the currency was introduced. Denominations have ranged from 1 yen to 10,000 yen; since 1984, the lowest-valued banknote is the 1,000 yen note. Before and during World War II, various bodies issued banknotes in yen, such as the Ministry of Finance and the Imperial Japanese National Bank. The Allied forces also issued some notes shortly after the war. Since then, the Bank of Japan has been the exclusive note issuing authority. The bank has issued five series after World War II.

Japan is generally considered a cash-based society, with 38% of payments in Japan made by cash in 2014.^[27] Possible explanations are that cash payments protect one's privacy, merchants do not have to wait for payment, and it does not carry any negative connotation like credit.

At present, portraits of people from the Meiji period and later are printed on Japanese bank notes. The reason for this is that from the viewpoint of preventing forgery, it is desirable to use a precise photograph as an original rather than a painting for a portrait.^[28][29]

Series E banknotes

Series E banknotes were introduced in 2004 in ¥1000, ¥5000, and ¥10,000 denominations. The EURion constellation pattern is present in the designs.

Image		Value	Dimensions	Main Color	Description		Series	Date of issue
Obverse	Reverse				Obverse	Reverse
		¥1000	150 × 76 mm	Blue	Hideyo Noguchi	Mount Fuji, Lake Motosu and cherry blossoms	Series E	November 1, 2004
		¥2000	154 × 76 mm	Green	Shureimon	The Tale of Genji and portrait of Murasaki Shikibu	Series D	July 19, 2000
		¥5000	156 × 76 mm	Purple	Ichiyō Higuchi	Kakitsubata-zu (Painting of irises, a work by Ogata Kōrin)	Series E	November 1, 2004
		¥10,000	160 × 76 mm	Brown	Fukuzawa Yukichi	Statue of hōō (phoenix) from Byōdō-in Temple	Series E	November 1, 2004

Series F banknotes

On April 9, 2019, Finance Minister Tarō Asō announced new designs for Series F banknotes ¥1000, ¥5000, and ¥10,000 notes, for use beginning in July 3, 2024.^[30] The ¥1000 bill will feature Kitasato Shibasaburō and The Great Wave off Kanagawa, the ¥5000 bill will feature Tsuda Umeko and Wisteria flowers, and the ¥10,000 bill will feature Shibusawa Eiichi and Tokyo Station. The Ministry decided to not redesign the ¥2000 note due to low circulation.

Series F (2024, scheduled)
Image		Value	Dimensions	Main Color	Description		Date of issue
Obverse	Reverse				Obverse	Reverse
		¥1000	150 × 76 mm	Blue	Kitasato Shibasaburō	The Great Wave off Kanagawa (from Thirty-six Views of Mount Fuji series by Hokusai)	July 3, 2024
		¥5000	156 × 76 mm	Purple	Umeko Tsuda	Wisteria flowers
		¥10,000	160 × 76 mm	Brown	Shibusawa Eiichi	Tokyo Station (Marunouchi side)

History

It has been suggested that this page be split into a new page titled History of the yen. (Discuss) (July 2023)

Early history (1868–1876)

5 yen coin from 1870 (year 3)

50 sen coin from 1870 (year 3)

Although the Edo Shogunate collapsed with the Meiji Restoration and a new government was born, the monetary system still took over that of the former entity. During this unstable period, the confusion caused by this form of exchange caused economic turmoil.^[31] The gold (counting money) system of eastern Japan and the silver (weighing money) system of the western Japan were not unified, and the difference in the gold-silver ratio caused a large amount of gold to flow overseas at the end of the Tokugawa shogunate. Emperor Meiji responded to this by appointing Ōkuma Shigenobu as head of Japan's monetary reform program. He worked with Inoue Kaoru, Itō Hirobumi, and Shibusawa Eiichi to run the Ministry of Finance, seeking to introduce a modern monetary system into Japan. Ōkuma eventually proposed that coins, which were previously square, be made into circles, and that the names of the traditional currencies, ryō (両), bu (分) and shu (朱), be unified into yen (円), which was accepted by the government.^[32] Other rejected proposals included physical weight units of "Fun" and "Momme" which never made it past the pattern stage.^[33][34][35]

The first gold yen coins consisted of 2, 5, and 20 yen coins which were struck throughout 1870. Five yen coins were first struck in gold for the Japanese government in 1870 at the San Francisco Mint.^[36] During this time a new mint was being established at Osaka , which did not receive the gold bullion needed for coinage until the following year.^[37] Gold bullion was delivered from private Japanese citizens, foreigners, and the Japanese government.^[38] Initially the government opted for silver, which would become the standard unit of value leaving gold coinage as a subsidiary.^[39] While gold coinage couldn't be produced domestically in 1870, the mint at Osaka could produce silver coins which included denominations of 5, 10, 20, and 50 sen.^[40][41] None of these coins dated "1870" circulated until the Meiji government officially adopted the "yen" as Japan's modern unit of currency on June 27, 1871.^[42] This Act formally stipulated the adoption of the decimal accounting system of yen (1, 圓), sen (​¹⁄₁₀₀, 錢), and rin (​¹⁄₁₀₀₀, 厘). The new currency was gradually introduced beginning from July of that year.

Japanese yen denominated paper currency was also conceived with the coins in 1870 as Meiji Tsuho notes by Italian engraver Edoardo Chiossone.^[43] These were released as fiat currency in denominations of 1, 2, 5, 10, 50, and 100 yen along with subsidiary notes of 10, 20, and 50 sen in 1872. Almost concurrently, the government established a series of national banks modeled after the system in the United States which issued national bank notes.

Satsuma Rebellion and aftermath (1877–1887)

Massive inflation from the Satsuma Rebellion in 1877 caused a glut of non-redeemable fiat currency notes. The issuance of national fiat banknotes was ultimately suspended in 1880 by then prime minister Matsukata Masayoshi.^[44][45] New policies were put into place which included the establishment of a centralized banking system.^[46][45] The Bank of Japan hence commenced operations on October 10, 1882 with the authority to print banknotes that could be exchanged for the old Government and National Bank Notes.^[47][48] By May 1883, another act provided the redemption and retirement of national bank notes.^[49][50] The National Bank Act was amended again in March 1896, providing for the dissolution of the national banks on the expiration of their charters.^[49] This amendment also prohibited national bank notes from circulating after December 31, 1899.^[51] In that year, Japan adopted a gold exchange standard, defining the yen as 0.75 g fine gold or US$0.4985.^[52]

This exchange rate remained in place until Japan left the gold standard in December 1931, after which the yen fell to $0.30 by July 1932 and to $0.20 by 1933.^[53]

It remained steady at around $0.30 until the start of the Pacific War on December 7, 1941, at which time it fell to $0.23.^[54]

The sen and the rin were eventually taken out of circulation at the end of 1953.^[55]

Fixed value of the yen to the U.S. dollar

No true exchange rate existed for the yen between December 7, 1941, and April 25, 1949; wartime inflation reduced the yen to a fraction of its prewar value.

After a period of instability, on April 25, 1949, the U.S. occupation government fixed the value of the yen at ¥360 per USD through a United States plan, which was part of the Bretton Woods system, to stabilize prices in the Japanese economy.^[56]

That exchange rate was maintained until 1971, when the United States abandoned the gold standard, ending a key element of the Bretton Woods system, and setting in motion changes that eventually led to floating exchange rates in 1973.

Yen and major currencies float

By 1971, the yen had become undervalued. Japanese exports were costing too little in international markets, and imports from abroad were costing the Japanese too much. This undervaluation was reflected in the current account balance, which had risen from the deficits of the early 1960s, to a then-large surplus of US$5.8 billion in 1971. The belief that the yen, and several other major currencies, were undervalued motivated the United States' actions in 1971.

Following the United States' measures to devalue the dollar in the summer of 1971, the Japanese government agreed to a new, fixed exchange rate as part of the Smithsonian Agreement, signed at the end of the year. This agreement set the exchange rate at ¥308 per US$. However, the new fixed rates of the Smithsonian Agreement were difficult to maintain in the face of supply and demand pressures in the foreign-exchange market. In early 1973, the rates were abandoned, and the major nations of the world allowed their currencies to float.

Yen adoption in Okinawa

After World War II the United States-administered Okinawa issued a higher-valued currency called the B yen from 1946 to 1958, which was then replaced by the United States dollar at the rate of $1 = 120 B yen. Upon the reversion of Okinawa to Japan in 1972 the Japanese yen then replaced the dollar. In light of the dollar's reduction in value from ¥360 to ¥308 just before the reversion, an unannounced "currency confirmation" took place on October 9, 1971, wherein residents disclosed their dollar holdings in cash and bank accounts; dollars held that day amounting to US$60 million were entitled for conversion in 1972 at a higher rate of ¥360.^[57]

Japanese government intervention in the currency market

In the 1970s, Japanese government and business people were very concerned that a rise in the value of the yen would hurt export growth by making Japanese products less competitive and would damage the industrial base. The government, therefore, continued to intervene heavily in foreign-exchange marketing (buying or selling dollars), even after the 1973 decision to allow the yen to float.^[58]

Despite intervention, market pressures caused the yen to continue climbing in value, peaking temporarily at an average of ¥271 per US$ in 1973, before the impact of the 1973 oil crisis was felt. The increased costs of imported oil caused the yen to depreciate to a range of ¥290 per US$ to ¥300 per US$ between 1974 and 1976. The re-emergence of trade surpluses drove the yen back up to ¥211 in 1978. This currency strengthening was again reversed by the second oil shock in 1979, with the yen dropping to ¥227 per US$ by 1980.^[58]

Yen in the early 1980s

During the first half of the 1980s, the yen failed to rise in value, though current account surpluses returned and grew quickly. From ¥221 per US$ in 1981, the average value of the yen actually dropped to ¥239 per US$ in 1985. The rise in the current account surplus generated stronger demand for yen in foreign-exchange markets, but this trade-related demand for yen was offset by other factors. A wide differential in interest rates, with United States interest rates much higher than those in Japan, and the continuing moves to deregulate the international flow of capital, led to a large net outflow of capital from Japan. This capital flow increased the supply of yen in foreign-exchange markets, as Japanese investors changed their yen for other currencies (mainly dollars) to invest overseas. This kept the yen weak relative to the dollar and fostered the rapid rise in the Japanese trade surplus that took place in the 1980s.

Effect of the Plaza Accord

JPY nominal and real effective exchange rates (2005 = 100)

In 1985, a dramatic change began. Finance officials from major nations signed an agreement (the Plaza Accord) affirming that the dollar was overvalued (and, therefore, the yen undervalued). This agreement, and shifting supply and demand pressures in the markets, led to a rapid rise in the value of the yen. From its average of ¥239 per US$ in 1985, the yen rose to a peak of ¥128 in 1988, virtually doubling its value relative to the dollar. After declining somewhat in 1989 and 1990, it reached a new high of ¥123 to US$ in December 1992. In April 1995, the yen hit a peak of under 80 yen/US$, temporarily making Japan's economy nearly the size of that of the US.^[59]

Post-bubble years

The yen declined during the Japanese asset price bubble and continued to do so afterwards, reaching a low of ¥134 to US$ in February 2002. The Bank of Japan's policy of zero interest rates has discouraged yen investments, with the carry trade of investors borrowing yen and investing in better-paying currencies (thus further pushing down the yen) estimated to be as large as $1 trillion.^[60] In February 2007, The Economist estimated that the yen was 15% undervalued against the dollar, and as much as 40% undervalued against the euro.^[61]

After the global economic crisis of 2008

Comparison of the GNP-weighted nominal exchange rates: CHF and JPY versus CNY, EUR, USD, and GBP

However, this trend of depreciation reversed after the global economic crisis of 2008. Other major currencies, except the Swiss franc, have been declining relative to the yen.

On April 4, 2013, the Bank of Japan announced that they would expand their asset purchase program by $1.4 trillion in two years. The Bank of Japan hopes to bring Japan from deflation to inflation, aiming for 2% inflation. The number of purchases is so large that it is expected to double the money supply, but this move has sparked concerns that the authorities in Japan are deliberately devaluing the yen to boost exports.^[62] However, the commercial sector in Japan worried that the devaluation would trigger an increase in import prices, especially for energy and raw materials.

Redenomination proposals

Numerous proposals have been made since the 1990s to redenominate the yen by introducing a new unit or new yen, equal to 100 yen, and nearly worth one U.S. dollar. This has not happened to date, since the yen remains trusted globally despite its low unit value, and due to the huge costs of reissuing new currency and updating currency-reading hardware. The negative impact of postponing upgrades to various computer software until redenomination occurs, in particular, was also cited.^[63]

Determinants of value

Most traded currencies by value
Currency distribution of global foreign exchange market turnover^[64]

Rank	Currency	ISO 4217 code (symbol)	% of daily trades (bought or sold) (April 2019)
1	United States dollar	USD (US$)	88.3%
2	Euro	EUR (€)	32.3%
3	Japanese yen	JPY (¥)	16.8%
4	Pound sterling	GBP (£)	12.8%
5	Australian dollar	AUD (A$)	6.8%
6	Canadian dollar	CAD (C$)	5.0%
7	Swiss franc	CHF (CHF)	5.0%
8	Renminbi	CNY (元)	4.3%
9	Hong Kong dollar	HKD (HK$)	3.5%
10	New Zealand dollar	NZD (NZ$)	2.1%
11	Swedish krona	SEK (kr)	2.0%
12	South Korean won	KRW (₩)	2.0%
13	Singapore dollar	SGD (S$)	1.8%
14	Norwegian krone	NOK (kr)	1.8%
15	Mexican peso	MXN ($)	1.7%
16	Indian rupee	INR (₹)	1.7%
17	Russian ruble	RUB (₽)	1.1%
18	South African rand	ZAR (R)	1.1%
19	Turkish lira	TRY (₺)	1.1%
20	Brazilian real	BRL (R$)	1.1%
21	New Taiwan dollar	TWD (NT$)	0.9%
22	Danish krone	DKK (kr)	0.6%
23	Polish złoty	PLN (zł)	0.6%
24	Thai baht	THB (฿)	0.5%
25	Indonesian rupiah	IDR (Rp)	0.4%
26	Hungarian forint	HUF (Ft)	0.4%
27	Czech koruna	CZK (Kč)	0.4%
28	Israeli new shekel	ILS (₪)	0.3%
29	Chilean peso	CLP (CLP$)	0.3%
30	Philippine peso	PHP (₱)	0.3%
31	UAE dirham	AED (د.إ)	0.2%
32	Colombian peso	COP (COL$)	0.2%
33	Saudi riyal	SAR (﷼)	0.2%
34	Malaysian ringgit	MYR (RM)	0.1%
35	Romanian leu	RON (L)	0.1%
Other			2.2%
Total[note 1]			200.0%

Beginning in December 1931, Japan gradually shifted from the gold standard system to the managed currency system.^[65]

The relative value of the yen is determined in foreign exchange markets by the economic forces of supply and demand. The supply of the yen in the market is governed by the desire of yen holders to exchange their yen for other currencies to purchase goods, services, or assets. The demand for the yen is governed by the desire of foreigners to buy goods and services in Japan and by their interest in investing in Japan (buying yen-denominated real and financial assets).

Since the 1990s, the Bank of Japan, the country's central bank, has kept interest rates low to spur economic growth. Short-term lending rates have responded to this monetary relaxation and fell from 3.7% to 1.3% between 1993 and 2008.^[66] Low interest rates combined with a ready liquidity for the yen prompted investors to borrow money in Japan and invest it in other countries (a practice known as carry trade). This has helped to keep the value of the yen low compared to other currencies.^{[citation needed]}

International reserve currency

Main page: Finance:Reserve currency

The special drawing rights (SDR) valuation is an IMF basket of the world's major reserve currencies, including the Japanese yen. Its share of 8.33% as of 2016 has declined from 18% as of 2000.^[67]

Historical exchange rate

Before the war commenced, the yen traded on an average of 3.6 yen to the dollar. After the war the yen went as low as 600 yen per USD in 1947, as a result of currency overprinting in order to fund the war, and afterwards to fund the reconstruction.

When MacArthur and the US forces entered Japan in 1945, they decreed an official conversion rate of 15 yen to the USD. Within 1945–1946: the rate tanked to 50 yen to the USD because of the ongoing inflation. During the first half of 1946, the rate fluctuated to 66 yen to the USD and eventually plummeting to 600 yen to the dollar by 1947 because of the failure of the economic remedies. Eventually, the peg was officially moved to 270 yen to the dollar in 1948 before being adjusted again from 1949 to 1971 to 360 yen to the dollar.

Beginning in 2022 the Yen rate has become increasingly weaker with each passing month. As a result, the yen fell to the 151 yen level against the US dollar, marking the first depreciation of the yen in 32 years on a nominal effective exchange rate and the first depreciation on a real effective exchange rate in 52 years. The reasoning behind this is the US moving towards higher interest rates, while Japan remains "ultra-low". Other factors include the strength of the US economy and its labor market, while Japan continues to lag behind its peers to bring its economy back to its pre-pandemic size. Japan's trade balance staying in the red is also likely feeding into the weaker yen.^[8] Interviewed by Asahi Shimbun Digital in September 2022, Izuru Kato, chief economist at Totan Research, expressed concern about the sharp fall in its value since 2022.^[9] and Moneypost reported that the exchange rate instability had made it impossible to exchange the currency for Japanese yen at some exchange offices.^[68] With the rate returning to ¥150 in November 2023, concern deepened as Nikkei sources expected the yen to depreciate further in the future.^[69] The Economist (London) expressed concern over the performance of the Bank of Japan, suggested that a systemic risk is posed to the world financial system.^[10]

Average spot rates v USD

The table below shows the monthly average of the United States dollar –yen spot rate (JPY per USD) at 17:00 JST:^[70][71][72]

JPY/USD exchange rate since 1950

JPY/USD exchange rate in the Heisei and Reiwa eras

JPY/CAD exchange rate

JPY/EUR exchange rate

JPY/GBP exchange rate

JPY/CHF exchange rate

JPY/AUD exchange rate

JPY/NZD exchange rate

JPY/ZAR exchange rate

JPY/CNY exchange rate

KRW/JPY exchange rate

JPY/INR exchange rate

See also

• Japan Mint
• Japanese military currency
• Economy of Japan
• Capital flows in Japan
• Monetary and fiscal policy of Japan
• Balance of payments accounts of Japan (1960–90)
• List of countries by leading trade partners
• List of the largest trading partners of Japan
• Korean Empire won (1902–1910)

Older currency

• Japanese mon (currency)
• Koban (coin)
• Ryō (Japanese coin)
• Wadōkaichin

Notes

References

Citations

Sources

Further reading

External links

Wikimedia Commons has media related to Japanese yen.

• Japanese currency FAQ in Currency Museum, Bank of Japan
• Images of historic and modern Japanese bank notes
• Catalog of the coins of Japan (Numista)
• Chart: US dollar in yen) (in German)
• Chart: 100 yen in euros (in German)
• Historical Currency Converter Estimates the historical value of the yen into other currencies

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