Japanese yen

Japanese yen
source
Currency name	Japanese yen
Iso code	JPY
Iso number	392
Issuing authority	Bank of Japan
Issuing authority website	www.boj.or.jp
Mint	Japan Mint
Inflation rate	2.8% (2023 est.)
Inflation source date	Statistics Bureau of Japan
Subunit ratio 1	1/100
Subunit name 1	sen (defunct)
Subunit ratio 2	1/1000
Subunit name 2	rin (defunct)
Frequently used coins	¥1, ¥5, ¥10, ¥50, ¥100, ¥500
Frequently used banknotes	¥1000, ¥2000, ¥5000, ¥10000
Rarely used coins	¥500 (commemorative)
Rarely used banknotes	¥2000 (low circulation)

Japanese yen. The official currency of Japan, it is the third-most traded currency in the world after the United States dollar and the euro. Issued by the Bank of Japan, it is a key reserve currency and a frequent focal point in global foreign exchange market dynamics. Its symbol is ¥, and its ISO 4217 code is JPY.

History

The was formally adopted under the Meiji Restoration in 1871 through the New Currency Act, replacing the complex mon system of the Edo period. The Bank of Japan was established in 1882, taking over note issuance and modeling its early policies on European central banks like the Banque de France. Following the Second World War, the value was fixed at 360 to the United States dollar under the Bretton Woods system, a rate maintained until the system's collapse. The 1985 Plaza Accord, an agreement among the G5 nations, led to a dramatic appreciation, significantly impacting Japanese export industries. The subsequent Lost Decades saw the Bank of Japan pioneer unconventional monetary policies, including early forays into zero interest-rate policy to combat persistent deflation.

Coins and banknotes

Coins are minted by the Japan Mint and include aluminum ¥1, brass ¥5, bronze ¥10, cupronickel ¥50, and nickel-brass ¥100 denominations, with the bi-metallic ¥500 coin being a prominent circulation piece. Current banknotes, the Series E, feature portraits of notable figures: bacteriologist Hideyo Noguchi on the ¥1000, author Murasaki Shikibu on the ¥5000, and industrialist Eiichi Shibusawa on the ¥10000 note. A distinct ¥2000 note commemorating the 2000 G8 summit in Okinawa remains in limited circulation. New Series F banknotes, featuring Shibusawa Eiichi, Umeko Tsuda, and Kitasato Shibasaburō, are scheduled for release in 2024. Security features are advanced, utilizing holograms, latent images, and intaglio printing to prevent counterfeiting.

Exchange rate

The exchange rate is a floating currency, determined by trading in the global foreign exchange market. It is famously volatile and sensitive to Japan's trade balance, interest rate differentials with the Federal Reserve and European Central Bank, and global risk sentiment, often strengthening during market turmoil as a perceived safe-haven currency. Key historical levels include the post-Plaza Accord peak near 80 to the United States dollar in 1995 and the prolonged period of weakness during the Abenomics era. The Ministry of Finance and the Bank of Japan have occasionally intervened in currency markets, such as during the 1998 Asian financial crisis and in 2022, to curb excessive volatility.

Role in the global economy

It is a major reserve currency, held in significant quantities by central banks like the People's Bank of China and the Federal Reserve System. Japan is a leading creditor nation, and the currency is heavily used in international finance, particularly in the Euroyen market and as a funding currency for carry trade strategies due to historically low interest rates. While its share in global SWIFT payments is smaller than the United States dollar or euro, it remains dominant in Asian trade and finance. The currency's status is supported by Japan's large sovereign bond market, one of the world's largest.

Monetary policy

Monetary policy is set by the Bank of Japan's Policy Board, which has pursued highly accommodative policies for decades. Under Governor Haruhiko Kuroda, the bank launched an aggressive Quantitative and qualitative monetary easing program in 2013, later evolving into Yield Curve Control to cap long-term Japanese government bond yields. This approach, combined with a negative short-term policy rate, aimed to achieve a 2% inflation target. Recent leadership under Governor Kazuo Ueda has begun a cautious normalization process, moving away from these extreme easing measures amid shifting global monetary conditions led by the Federal Reserve. Policy decisions are closely watched for their impact on global liquidity and exchange rates.

Category:Currencies of Japan Category:ISO 4217