The
(sign: ¥; code:
JPY) is the currency of
Japan
. It is the third most-traded currency in the
foreign exchange market after
United States dollar and the
euro. It is also widely used as a
reserve currency after the U.S. dollar, the
euro and the
pound sterling. As is
common when
counting in
East Asia, large quantities of yen are often counted in
multiples of 10,000 (
man, 万) in the same way as values in
Western countries are often quoted in thousands.
Pronunciation and etymology
The word
en literally means "round object" in
Japanese, as
yuán does in
Chinese, referring to the
Imperial Chinese coins that were circular
in shape and widely used in Japan up to the
Tokugawa Period. In 1695, the character 元
(
ghen), signifying "round or rounded") was placed on the
obverse of copper coins.
The spelling and pronunciation "yen" is standard in
English. This is because mainly English
speakers who visited Japan at the end of the
Edo
era to the early
Meiji era spelled words this
way. In the 16th century, Japanese "e (エ)/we (ヱ)" had been
pronounced [je] and Portuguese missionaries had spelled them that
way. Some time thereafter, by the middle of the 18th century,
"e/we" came to be pronounced [e] as in modern Japanese, although
some regions retain the [je] pronunciation.
Walter Henry Medhurst, who had not
come to Japan and interviewed some Japanese in Batavia (Jakarta
), spelled
some "e"s as "ye" in his An English and Japanese, and Japanese
and English Vocabulary (1830). In
the early Meiji era,
James Curtis
Hepburn, following Medhurst, spelled all "e"s as "ye" in his
A Japanese and English dictionary (1st ed.
1867). 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 all "ye"s to "e" in the 3rd edition
(
1886) in order to mirror the contemporary
pronunciation, except "yen". This was probably already fixed and
have remained so ever since.
History
Introduction
The yen was officially adopted by the
Meiji government in an Act signed on May 10,
1871. The new currency, in the form of a silver coin similar to the
contemporary Mexican Peso, was gradually introduced beginning from
July of that year. The yen replaced
Tokugawa coinage, a complex monetary system
of the
Edo period based on the
mon. The
New Currency Act
of 1871 stipulated the adoption of the decimal accounting system of
yen (1, 圓), sen ( , 錢), and rin ( , 厘), with the coins being round
and cast as in the West. The yen was legally defined as 0.78
troy ounces (24.26 g) of pure silver, or
1.5 grams of pure gold. The same amount of silver is worth about
1181 modern yen, while the same amount of gold is worth about 4715
yen. The Act also moved Japan onto the
gold standard. (The sen and the rin were
eventually taken out of circulation at the end of 1953.)
Fixed value of the yen to the US dollar
The yen lost most of its value during and after
World War II.
After a period of instability, in 1949,
the value of the yen was fixed
at ¥360 per US$1 through a
United States plan, which was part of the Bretton Woods
System
, to stabilize prices in the Japanese economy. That
exchange rate was maintained until 1971, when
the United States abandoned the
gold
standard, which had been a key element of the Bretton Woods
System, and imposed a
10 percent
surcharge on
imports, setting in motion
changes that eventually led to
floating exchange rates in
1973.
Undervalued yen
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 U.S.
$5.8 billion in 1971. The belief that the yen, and several other
major currencies, were undervalued motivated the United States'
actions in 1971.
Yen and major currencies float
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$1. 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.
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.
Despite intervention, market pressures caused the yen to continue
climbing in value, peaking temporarily at an average of ¥271 per
US$1 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 to ¥300 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 by 1980.
Yen in the early 1980s
During the first half of the 1980s, the yen failed to rise in value
even though current account surpluses returned and grew quickly.
From ¥ens 221 in 1981, the average value of the yen actually
dropped to ¥ens 239 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
[[Image:1977 Nikishi
International.jpg|thumb|right|185px|
1977 Niskishi
International
Ten speed road bike
Japanese bicycle brands such as
Nishiki had enjoyed tremendous success
during the United States' 1970's
bike
boom, only to suffer during the late 1980's Yen fluctuation.
Because of the steep decline in the Yen's value, the manufacture of
Nishiki bicycles was moved from Japan in 1989 to
Giant Bicycles in Taiwan. The brand was
ultimately absorbed by Derby International, which discontinued the
brand in the United States in 2001.]]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$1 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$1 in December 1992. In April 1995, the yen hit a peak of
under 80 yen per dollar, temporarily making Japan's economy nearly
the size of the US.
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$1 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. In February 2007,
The Economist estimated that
the yen is 15% undervalued against the dollar and as much as 40%
undervalued against the euro.
Coins
A silver one-yen coin of 1870
Coins were introduced in 1870. There were silver 5, 10, 20 and 50
sen and 1 yen, and gold 2, 5, 10 and 20 yen. Gold 1 yen were
introduced in 1871, followed by copper 1 rin, ½, 1 and 2 sen in
1873.
Cupronickel 5 sen coins were introduced
in 1889. 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. In 1920, cupro-nickel 10 sen coins were
introduced.
Production of silver coins 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. Clay 5 and 10 yen
coins were produced in 1945 but not issued for circulation.
After the war, brass 50 yen, 1 and 5 yen were introduced between
1946 and 1948. In 1949, the current type of holed 5 yen was
introduced, followed by bronze 10 yen (of the type still in
circulation) in 1951.
Coins in denominations of less than 1 yen became invalid on
December 31, 1953, following enforcement of the .
In 1955, the current type of aluminium 1 yen was introduced, along
with unholed, nickel 50 yen. In 1957, silver 100 yen pieces were
introduced. These were replaced in 1967 by the current,
cupro-nickel type, along with the holed 50 yen coin. In 1982, the
first 500 yen coins were introduced.
The date (expressed as the year in the reign of the current
emperor) is on the reverse of all coins, and, in most cases,
country name (through 1945, 大日本 or
Dai Nippon, "Great Japan"; after 1945, 日本国,
Nihon
koku, "State of Japan") and the value in kanji is on the
obverse, except for the present 5-yen coin where the country name
is on the reverse.
As of September 4, 2009, 500 yen coins are the highest valued coins
to be used regularly in the world (this place is typically taken by
the 5
Cuban convertible peso
coins), with values in the neighborhood of US$5.50, €3.90, £3.80
and CHF 5.80.
The United States' largest-valued
commonly-used coin (25¢) is worth ¥23; the Eurozone's largest (€2)
is worth ¥255; the United
Kingdom's
largest
(£2) is worth
¥260; and Switzerland
's largest (CHF 5) is
worth ¥430. Because of this high face value, the 500 yen has
been a favorite target for counterfeiters. It was counterfeited to
such an extent that in 2000 a new series of coins was issued with
various security features. In spite of these changes, however,
counterfeiting continues.
The 1 yen coin is made out of 100% aluminum.
On various occasions, commemorative coins are minted, often using
gold and silver with face values as high as 100,000 yen. The first
of these were silver ¥100 and ¥1000
Summer Olympic coins issued for the
1964 games. Even though they can be used, they are treated as
collectibles and normally do not circulate.
Instead of displaying the
A.D. year of mintage
like most nations' coins, yen coins instead display
the year of the current emperor's reign.
For example, a coin minted in 2009 would bear the date
Heisei 21 (the 21st year of
Emperor Akihito's reign).
| Currently circulating coins [6056] |
| Image |
Value |
Technical parameters |
Description |
Date of first minting |
| Diameter |
Thickness |
Mass |
Composition |
Edge |
Obverse |
Reverse |
 |
¥1 |
20 mm |
1.2 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 |
 |
¥10 |
23.5 mm |
1.5 mm |
4.5 g |
95% copper
3–4% zinc
1–2% tin |
Reeded |
Hōōdō Temple, Byōdō-in , state title, value |
Evergreen tree, value, year of minting |
1951 |
| 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 |
 |
¥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 |
 |
¥500 |
26.5 mm |
2 mm |
7.2 g |
Cupronickel
75% copper
25% nickel |
Smooth with lettering ("NIPPON ◆ 500 ◆ NIPPON ◆ 500 ◆") |
Paulownia, state title,
value |
Value, bamboo, Mandarin orange, year of minting |
1982 (no longer in mintage, limited circulation) |
 |
7 g |
72% copper
20% zinc
8% nickel |
Reeded slantingly |
Value, bamboo, Mandarin orange, year of minting, latent
image [6057] |
2000 |
|
The coins are easy to distinguish for the blind.
|
Unholed |
Holed |
| Smooth edge |
¥1 (light)
¥10 (medium)
|
¥5 |
| Reeded edge |
¥100 (medium)
¥500 (heavy)
|
¥50 |
Banknotes
The issuance of the yen banknotes began in 1872, two years after
the currency was introduced. Throughout its history, the
denominations have ranged from 10 yen to 10000 yen.
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. Series E, the current series, consists of ¥1000, ¥2000, ¥5000,
and ¥10,000.
Determinants of value
Beginning in December 1931, Japan gradually shifted from the gold
standard system to the managed currency system.
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 in order 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. 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.
International reserve currency
The
Special Drawing Rights
(SDR) Valuation is an IMF basket of currencies, including the
Japanese yen. The SDR is linked to a basket of currencies with 44%
for the dollar, 34% for the euro, and 11% each for the yen and
pound sterling. The exchange rate for the Japanese yen is expressed
in terms of currency units per U.S. dollar; other rates are
expressed as U.S. dollars per currency unit. The SDR currency value
is calculated daily and the valuation basket is reviewed and
adjusted every five years. The SDR was created in 1969 to support
the fixed exchange system.
Critics worry that the SDR (Special Drawing Rights) or the amount
of SDRs will not rival the dollar, euro or yen:
Far from becoming a separate international currency,
the SDR will remain a derivative of the dollar and a few other
major national currencies.
Also, the SDR does not contain the Chinese Yuan, Indian Rupee,
Australian Dollar or Canadian Dollar, which are important benchmark
or secondary global reserve currencies.
Historical exchange rate
The table below shows the number of yen per U.S. dollar (monthly average).
| Year |
Month |
| Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
| 1949–71 |
360 |
| 1972 |
308 |
| 1973 |
301.15 |
270.00 |
265.83 |
265.50 |
264.95 |
265.30 |
263.45 |
265.30 |
265.70 |
266.68 |
279.00 |
280.00 |
| 1974 |
299.00 |
287.60 |
276.00 |
279.75 |
281.90 |
284.10 |
297.80 |
302.70 |
298.50 |
299.85 |
300.10 |
300.95 |
| 1975 |
297.85 |
286.60 |
293.80 |
293.30 |
291.35 |
296.35 |
297.35 |
297.90 |
302.70 |
301.80 |
303.00 |
305.15 |
| 1976 |
303.70 |
302.25 |
299.70 |
299.40 |
299.95 |
297.40 |
293.40 |
288.76 |
287.30 |
293.70 |
296.45 |
293.00 |
| 1977 |
288.25 |
283.25 |
277.30 |
277.50 |
277.30 |
266.50 |
266.30 |
267.43 |
264.50 |
250.65 |
244.20 |
240.00 |
| 1978 |
241.74 |
238.83 |
223.40 |
223.90 |
223.15 |
204.50 |
190.80 |
190.00 |
189.15 |
176.05 |
197.80 |
195.10 |
| 1979 |
201.40 |
202.35 |
209.30 |
219.15 |
219.70 |
217.00 |
216.90 |
220.05 |
223.45 |
237.80 |
249.50 |
239.90 |
| 1980 |
238.80 |
249.80 |
249.70 |
238.30 |
224.40 |
218.15 |
226.85 |
219.20 |
212.00 |
211.75 |
216.75 |
203.60 |
| 1981 |
205.20 |
208.85 |
211.40 |
215.00 |
223.50 |
225.75 |
239.75 |
228.75 |
231.55 |
233.35 |
214.15 |
220.25 |
| 1982 |
228.45 |
235.20 |
248.30 |
236.30 |
243.70 |
255.55 |
256.65 |
259.60 |
269.40 |
277.40 |
253.45 |
235.30 |
| 1983 |
238.40 |
235.55 |
239.30 |
237.70 |
238.60 |
239.80 |
241.50 |
246.75 |
236.10 |
233.65 |
234.20 |
232.00 |
| 1984 |
234.74 |
233.28 |
224.75 |
226.30 |
231.63 |
237.45 |
245.45 |
241.70 |
245.40 |
245.30 |
246.50 |
251.58 |
| 1985 |
254.78 |
259.00 |
250.70 |
251.40 |
251.78 |
248.95 |
236.65 |
237.10 |
216.00 |
211.80 |
202.05 |
200.60 |
| 1986 |
192.65 |
180.45 |
179.65 |
168.10 |
172.05 |
163.95 |
154.15 |
156.05 |
153.63 |
161.45 |
162.20 |
160.10 |
| 1987 |
152.30 |
153.15 |
145.65 |
139.65 |
144.15 |
146.75 |
149.25 |
142.35 |
146.35 |
138.55 |
132.45 |
122.00 |
| 1988 |
127.18 |
128.12 |
124.50 |
124.82 |
124.80 |
132.20 |
132.53 |
134.97 |
134.30 |
125.00 |
121.85 |
125.90 |
| 1989 |
129.13 |
127.15 |
132.55 |
132.49 |
142.70 |
143.95 |
138.40 |
144.28 |
139.35 |
142.15 |
142.90 |
143.40 |
| 1990 |
144.40 |
148.52 |
157.65 |
159.08 |
151.75 |
152.85 |
147.50 |
144.50 |
137.95 |
129.35 |
132.75 |
135.40 |
| 1991 |
131.40 |
131.95 |
140.55 |
137.42 |
137.97 |
138.15 |
137.83 |
136.88 |
132.95 |
131.00 |
130.07 |
125.25 |
| 1992 |
125.78 |
129.33 |
133.05 |
133.38 |
128.33 |
125.55 |
127.30 |
123.42 |
119.25 |
123.35 |
124.75 |
124.65 |
| 1993 |
124.30 |
117.85 |
115.35 |
111.10 |
107.45 |
106.51 |
105.60 |
104.18 |
105.10 |
108.23 |
108.82 |
111.89 |
| 1994 |
109.55 |
104.30 |
102.80 |
102.38 |
104.38 |
98.95 |
99.93 |
99.57 |
98.59 |
97.37 |
98.98 |
99.83 |
| 1995 |
98.58 |
96.93 |
88.38 |
83.77 |
83.19 |
84.77 |
88.17 |
97.46 |
98.18 |
101.90 |
101.66 |
102.91 |
| 1996 |
106.92 |
104.58 |
106.49 |
104.29 |
108.37 |
109.88 |
107.13 |
108.40 |
111.45 |
113.27 |
113.44 |
115.98 |
| 1997 |
122.13 |
120.88 |
123.97 |
126.92 |
116.43 |
114.30 |
117.74 |
119.39 |
121.44 |
120.29 |
127.66 |
129.92 |
| 1998 |
127.34 |
126.72 |
133.39 |
131.95 |
138.72 |
139.95 |
143.79 |
141.52 |
135.72 |
116.09 |
123.83 |
115.20 |
| 1999 |
115.98 |
120.32 |
119.99 |
119.59 |
121.37 |
120.87 |
115.27 |
110.19 |
105.66 |
104.89 |
102.42 |
102.08 |
| 2000 |
106.90 |
110.27 |
105.29 |
106.44 |
107.30 |
105.40 |
109.52 |
106.43 |
107.75 |
108.81 |
111.07 |
114.90 |
| 2001 |
116.38 |
116.44 |
125.27 |
124.06 |
119.06 |
124.27 |
124.79 |
118.92 |
119.29 |
121.84 |
123.98 |
131.47 |
| 2002 |
132.94 |
133.89 |
132.71 |
127.97 |
123.96 |
119.22 |
119.82 |
117.97 |
121.79 |
122.48 |
122.44 |
119.37 |
| 2003 |
119.21 |
117.75 |
119.02 |
119.46 |
118.63 |
119.82 |
120.11 |
117.13 |
110.48 |
108.99 |
109.34 |
106.97 |
| 2004 |
105.88 |
109.08 |
103.95 |
110.44 |
109.56 |
108.69 |
111.67 |
109.86 |
110.92 |
105.87 |
103.17 |
103.78 |
| 2005 |
103.58 |
104.58 |
106.97 |
105.87 |
108.17 |
110.37 |
112.18 |
111.42 |
113.28 |
115.67 |
119.46 |
117.48 |
| 2006 |
117.18 |
116.35 |
117.47 |
114.32 |
111.85 |
114.66 |
114.47 |
117.23 |
117.91 |
118.01 |
117.23 |
115.57 |
| 2007 |
120.59 |
120.49 |
117.29 |
118.81 |
120.77 |
122.64 |
121.56 |
116.74 |
115.01 |
115.77 |
111.24 |
112.28 |
| 2008 |
107.60 |
107.18 |
100.83 |
102.41 |
104.11 |
106.86 |
106.76 |
109.24 |
106.71 |
100.20 |
95.01 |
90.28 |
| 2009 |
89.51 |
97.87 |
98.31 |
97.67 |
96.45 |
96.61 |
94.37 |
94.90 |
91.27 |
90.37 |
|
|
| Year |
Month |
| Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
|
See also
Older currency
Notes
- [1]
- Online Etymology: usage, 1875. Published by Houghton
Mifflin,
- Titsingh, Isaac. (1834). Annales des empereurs du japon, p.
415.
- Medhurst, Walter Henry. (1830).Current inflation is at 5%
An English and Japanese, and Japanese and
English Vocabulary: Compiled from Native Works, p.
296.
- Hepburn, James Curtis. (1867). A Japanese and English Dictionary, p.
127.
- A. Piatt Andrew, Quarterly Journal of Economics, "The End of
the Mexican Dollar",18:3:321-356, 1904, p.345
- )
- "What Keeps Bankers Awake at Night? The
Economist (London). February 1, 2007.
- "The Cheap Yen is Dangerous," The
Economist (London). February 8, 2007.
- Bank of Japan: "Statistics." 2008.
-
http://timesofindia.indiatimes.com/home/opinion/sa-aiyar/swaminomics/Can-IMF-currency-replace-the-dollar/articleshow/4360430.cms
- Bank of Japan: "Foreign Exchange Rates." 2006.
Further reading
External links
German
_front.jpg/180px-P103-2000Yen-(2000)_front.jpg)
Top topics
Wikis
Quiz
Facts
Map
Search
