Japanese Yen (JPY)

The yen is the decimal-based currency system of Japan. The currency is designated with the ¥ symbol that precedes a numerical entry, and because Japan is the only country that uses the yen as its currency, the ¥ symbol is never preceded by a country code, but the Japanese yen is also written as JPY in financial transactions and currency exchanges.

Japan’s currency unseated itself from the gold standard of the Bretton Woods exchange system in 1971 and loosely pegged itself to the United States dollar. The currency was gradually regaining its pre-World War II value momentum until the dual natural disasters that struck Japan in March and April 2011 and devastated the country economically and financially.

Japan’s currency system has involved both coinage and banknotes since 1872. Each denomination, regardless of metal or paper, differentiates itself from others by size, colour, composition or design.

Coin denominations include ¥1, ¥5, ¥10, ¥50, ¥100 and ¥500 coins. The ¥5 and ¥50 coins are uniquely distinctive with the centre holes in the coins; all others are solid.

Historically, banknotes included denominations as low as ¥10, but the current E series comprises ¥1000, ¥2000, ¥5000 and ¥10,000. The latter two were first introduced into the currency in the C series first issued from 1957 through 1969 and have been included in each currency series since their introduction.

Both coins and banknotes reflect different sizes, though unlike some gradient currencies, increased size does not always reflect higher denomination.

At the end of 2010, the Japanese Yen was the sixth-largest reserve currency in the world, which meant that the yen ranked sixth in global currencies for large-scale financial transactions and currency exchanges.

Traditionally, the Japanese government has held an economic position of undervaluing the Japanese yen to stimulate economic growth, which made the cost of importing Japanese goods comparatively low. The foreign exchange market thrived with the undervaluation, however, and exchange rates for the JPY against other currencies were usually more favourable than not.

Low interest charged on loans also made the Japanese yen extremely attractive for international trades and commerce.

The long-term effects of the earthquake, the aftershocks and the tsunami that almost destroyed Japan’s industrial-based economy on the international scene, the financial market and the global economy have yet to be fully realised, and Japan will again have to rebuild its international and local stature. The currency’s relative value has shown signs of strengthening as well, but it has not yet fully recovered from the steep decline in early 2011.