The Japanese yen is the official currency in Japan. In the Western world it’s pronounced yen but in Japan, it is pronounced en and the sign is 円. The Japanese currency is the world’s third most traded currency after the American dollar and the euro, and it is also the fourth most used reserve currency.
The yen has been used in Japan since the mid-1800s when the country went through the Meiji Restoration. Before that, all the Japanese feudal fiefs issued their own currencies in a confusing and completely incompatible system.
1 yen used to be and could technically still be divided in 100 sen and 1,000 rin. Recently, all the subunits were abolished and today only yen is used across the nation.
Abbreviations of the Japanese Yen
Naturally, because of the currency’s one-syllable name, it lacks any real nicknames or abbreviations. It does, however, have its own official sign just like the American dollar, the euro, and the British pound. The international sign is ¥.
The currency also has two official Japanese signs. The first and most commonly used sign for the Japanese yen is 円, and the traditional and a little more uncommon sign for it is 圓.
The Japanese yen also has an official ISO-4217 code which is JPY. Chances are that you’ve already seen the code before if you’re into forex trading since JPY is a currency that most have traded.
The Japanese Yen’s Denominations
Due to the fact that Japan has abolished all subunits of the yen, their physical currency is very easy to use and understand. Currently, there are 9 denominations, six coins, and three banknotes, plus an extra commemorate and rarely used bill. Many of the coins were first minted in the 1950s and 1960s, and some of them still remain in circulation to this day.
- ¥2,000 – is very rare and only printed in a few versions to commemorate the 26th G8 meeting in Okinawa on July 19, 2000.
The coins all have Japanese designs such as famous temples, cherry blossoms, etc. on the obverse side and the value and year of minting on the reverse side. Note that instead of using the Gregorian calendar year of minting, the Japanese coins have the year of the current emperor’s reign printed on them. A coin printed in 2010 would, for example, have 27 printed on it because that was Emperor Akihito’s 27th year on the throne.
There have been five different series of the Japanese bills since World War ll. The current one is called Series E, and it was first introduced in 2004, excluding the ¥2,000 bill.
All the bills have influential Japanese people on the obverse side and Japanese landscapes, arts, and buildings on the reverse side. The ¥1,000 bill has Hideyo Noguchi and Mt. Fuji on it, the ¥5,000 bill has Ichiyó Higuchi and Kakitsubata-zu on it, and the ¥10,000 bill has Fukuzawa Yukichi and the statue of hōō depicted on it.
History of the Japanese Yen
In the 1800s, before Japan created its own currency, the Mexican peso was used as the currency in Japan, parts of China and Southeast Asia. In the year 1871, the new Meiji government decided to introduce an all-Japanese currency called yen. Yen means round object in Japanese and the name originated from the shape of the first silver coins that were minted.
The Japanese yen was at first considered to be one of the world’s dollar currencies which, at the time, all had similar values. Other dollar currencies were the American dollar and the Mexican peso.
After a devaluation of silver in 1873 the Japanese yen lost half of its value and a gold standard was introduced to save it. The exchange rate for one Japanese yen was $0.50 and that exchange rate remained fixed until 1931 when Japan left the gold standard.
Because of the massive inflation and costs of World War II, the Japanese lacked a definite exchange rate between 1941 and 1949. After that, the currency was pegged to at an exchange rate of $1 = ¥360. Since then, the Japanese yen has gone through several changes and updates due to inflation, undervaluation, and other issues. It has also been pegged to different exchange rates.
Japanese Yen Today
Today, the Japanese yen is doing much better. It is issued and regulated by the Bank of Japan (BOJ, 日本銀行) and it is one of the most influential currencies in the world.
For example, the yen is the fourth largest reserve currency after USD, EUR, GBP, as well as the third most traded currency on the forex market. It is also a part of the IMF’s special drawings right, a currency basket that many of today’s fixed currencies are pegged to. You could say that the special drawings right (XDR) is a made-up reserve currency based on the collective exchange rate of the currencies in the basket, JPY included.
Japan is also one of the leading economies in Asia giving it an important role in all the Asian markets but also in the rest of the world.
Trade with the Japanese Yen
The Japanese yen is as we’ve already mentioned immensely popular to trade with, representing 21.6% of the daily market share during 2016. That number is even more impressive if you compare it to the British pound, which is the fourth most traded currency but only represents 12.1% of the daily market share. Big and influential currencies like these are extremely stable which is the main reason why they are traded so much.
JPY/USD – It is no wonder why the JPY and the USD are the most traded currency pair on the Japanese market. The first and third most traded currencies will always have a close relationship to one another. Additionally, massive trade goes on between the two nations as well as economic, political, and military collaborations.
JPY/EUR – The second most popular currency to buy and sell JPY with is EUR, and that is for the same reasons as with the USD. The European currency union and Japan have a great relationship both politically as well as on an export/import basis. This leads to perfect trading opportunities.