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The Japanese yen is considered one of the world’s hard currencies, which means it tends to hold its value and is typically used as a safe-haven for investment. The ISO 4217 code for the yen is ‘JPY’ and its symbol used when writing is ‘¥.’ The yen isn’t broken down into a smaller currency unit.
History of Japanese Currency Prior to the Yen
The earliest forms of Japanese currency were specific types of particularly valuable commodities, such as rice, gold, and hemp cloth. Chinese coinage was also used, but Japan didn’t mint coinage currency itself until the eighth century.
Japan stopped issuing its own coinage due to declining values and reverted back to Chinese coinage by 12th century. As the Japanese economy began to grow again, two privately minted coins began circulating to meet monetary demand.
Japan developed its first standardized currency in the late 15th century. Gold and silver mining had begun earlier and the metals were used to create plates and coins. During the 17th century, new standardized coins minted in gold, silver, and copper where issued. Paper money first appeared in 1601.
The various coins and notes used continued to lose value, especially as government debt increased. Japan was opened to the West in the middle of the 19th century. Ships coming from the West brought currencies minted from New World metals. In 1859, the Mexican dollar was made an official currency.
However, a variety of competing Japanese currencies continued to get printed and the country’s metal reserves started flowing out of the country. The money supply exploded, devaluing currencies.
History of the Yen
A silver coin called the ‘yen,’ meaning ’round object,’ was locally produced in the 19th century. The New Currency Act of 1871 made the yen the country’s official currency. A single yen was valued at 1.5 grams of pure gold. At the time, the yen was broken into smaller denominations: There were 100 sen to one yen and 1000 rin to one yen. The printing of banknotes wasn’t centralized until 1882 when the Bank of Japan was established and given sole authority to print them.
The yen lost value against the U.S. dollar in the late 19th century, so Japan adopted the gold standard in 1897 to fix the yen’s value at fifty U.S. cents. Japan abandoned the gold standard after World War I around the time the United Kingdom did. During World War II and shortly thereafter, the yen was highly volatile. In 1949, its value was fixed at ¥360 to one U.S. dollar. The yen held this value, which was believed to be undervalued, until the United States stopped direct convertibility of the dollar for gold in 1971.
The yen began floating freely in currency markets in 1973. It strengthened through the 1970s, peaking at ¥211 to one U.S. dollar 1978. It weakened against the U.S. dollar during the 1980s, hitting ¥239 to one U.S. dollar in 1985. With low interest rates and increased international flow of currencies, there was a large supply of yen in international markets that kept its value low.
The Plaza Accord in 1985 was intended to devalue the U.S. dollar against other major global currencies. This lead to a strengthening of the yen, when it peaked in 1995 valued at ¥80 to one U.S. dollar. As the Japanese economic bubble exploded in the 1990s, the yen steadily lost value against the U.S. dollar. However, in the wake of the global economic crisis of 2008, the yen’s value has strengthened against most other hard currencies.
Yen Denominations in Circulation
The following banknotes are currently in circulation:
The following coins are currently in circulation: