Currencies

The Japanese Yen

Contents

The Japanese yen is the official currency of Japan uncirculated in other countries. It is the fourth reserve currency in the world, widely used in Forex exchange transactions.

Japanese Yen Currency

Japanese Yen Currency

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Historical Background

The first coins appeared in Japan in 1600 when the Tokugawa shogunate came to power. There had not been a single currency before because each dynasty used to mint their own money limited in circulation. 

The Tokugawa clan took control of mining camps, metal fabrication, and established the mints, which enabled the issuance of the single currency throughout Japan. Nonetheless, the currencies of various clans continued to circulate. Private mints created around 1,700 kinds of coins and banknotes during the 200-year Edo period. 

The system was revoked in 1868 when Japan began a new period of its existence - the Meiji Restoration. The country underwent a 20-year path of reforms in social, political, and military spheres. As a result, Japan revived and became one of the most developed countries in the world. 

In 1869, the yen appeared as a single currency. The exchange of the clans’ money continued for ten years more. The coins made of pure silver and gold were issued for the first time, and Japan adopted the gold standard. Gradually, the content of gold in coins reduced from 1.5 grams to 0.75 of pure gold. On the eve of the First World War, the peg of state currency to gold was revoked. Though it was renewed later, the peg disappeared eventually in 1933. 

The fractional coins of sen and rin became the yen’s subunits but in 1954 they were withdrawn from circulation. Sen was the yen’s one-hundredth, and rin was its one-thousandth. 

Only the Bank of Japan issued the Japanese money at first. However, several private financial organisations, accredited by the main state bank, obtained this right later. 

The yen underwent the first inflation in 1927 when a large-scale crisis took place. The emersed boom among the depositors of banks entailed a ridiculous step taken by bankers. Aimed at a swift repayment of the money deposited, they issued loads of the 200-yen notes with a blank reverse. 

When World War II began, the yen’s circulation temporarily extended by virtue of the countries under the empire’s rule like Korea, Macau, Thailand, and North China.

During the post-war period, the currency rate plummeted: one dollar equaled ¥50-¥250, and later - even ¥900. Some prefectures, for example, Okinawa, prohibited the yen at all and switched to occupational money, and later - to the US dollar. The latter one was completely withdrawn in 1972.

The yen was pegged to the US dollar from 1949 to 1971 with an official exchange rate of 360 to 1. There were some periods of the dollar’s fall beginning from the 1970s, as a result of which the exchange rate strengthened greatly and constituted 336:1, and then 308:1. Later, the rate became fluctuating. At present, one US dollar equals one hundred yen.

Two organisations, the Ministry of Finance and the Bank of Japan, have taken control over the issuance of yen since 1932. 

The etymology of the word ‘yen’ stems from the Japanese ‘en’ and means ‘round’. There is also the other point: the currency name of the Land of the Rising Sun is also connected to the Hong Kong yuan, which were silver coins issued by the British colonisers in Hong Kong. They got into Japan in different ways and could provide the name of its new official currency. 

Design

At present, Japan issues paper money in small amounts. There are only three types of banknotes in circulation, and, as a rule, they are of big denominations like ¥1,000, ¥5,000, and ¥10,000. The banknote of ¥2,000 appeared in 2000. Though it was withdrawn from circulation later, it is still considered legit. 

All the banknotes are of the same width but of different lengths - 150 mm, 156 mm, and 160 mm respectively.

 The banknotes of the 2004 emission series are in circulation now:

  • ¥1,000 is a blue banknote featuring the portrait of microbiologist Hideyo Noguchi on the obverse, and the main sacred objects of Japan - Mount Fuji and cherry blossoms on the shore of Lake Motosu on the reverse. 
  • ¥5,000 is a purple banknote that depicts the portrait of a writer Ichiyō Higuchi on the obverse, and the painting of irises by Ogata Kōrin, a famous Japanese painter of the Rinpa school, on the reverse. 
  • ¥10,000 is a light-brown banknote that features a portrait of Yukichi Fukuzawa, a Japanese writer and a philosopher on the obverse, and the phoenix, one of the two bronze statues on the roof of Byōdō-in temple, on the reverse. 

Coins are in a much wider circulation in Japan. Their denominations are ¥1, ¥5, ¥10, ¥50, ¥100, ¥500, and ¥1,000. The coins of ¥5 and ¥50 have the punched holes in the middle. 

Apart from the denomination, the year of minting, and the name of the country in Japanese, each coin features a significant symbol:

  • ¥1 - a young tree
  • ¥5 - a rice plant
  • ¥10 - Byōdō-in temple
  • ¥50 - chrysanthemum
  • ¥100 - cherry tree
  • ¥1,000 -  paulownia

Coins are made of aluminum, copper, and cupronickel. 

In 2008-2009, the Bank of Japan issued two series of coins commemorating all 47 prefectures of the country. Only one denomination of ¥500 was minted and comprised the alloy of copper, zinc, and nickel.

The coins in denomination of ¥1,000 have been minted to commemorate some significant events in the life of Japan. The first series was issued before the 1964 Olympics. Then commemorative coins have emerged since the beginning of the 2000th. There are already 26 coins in total. 

The Japanese Yen in the World

This currency has been on the reserve list for many decades. Now it has moved to the fourth position from the third one, having been superseded by the British pound and the euro

The yen exchange rate is changing rapidly, which makes it an attractive tool for generating substantial profits.