The US Dollar, valued at $1.00, is the most commonly used currency today and the third most traded currency (after the Japanese Yen, Chinese Yuan). The Dollar was formerly known as the Colonial dollar before Independence; it was minted by various states and came into wide usage after the American Revolution. The term ‘dollar’ comes from the word ‘thaler’, a silver coin minted in Germany.
About Japanese Yen
The Japanese yen is the official currency of Japan and is abbreviated JPY. The yen is the third most frequent trading currency in the foreign exchange market, after the US dollar and euro. It has also served as a reserve currency like the USD, euro, and pound sterling.
The yen is the name of a currency unit (1 yen, 5 yen, 10 yen, 50 yen) that was first introduced in 1871. The current series of banknotes began circulation in 2004 with 1,000 JPY, 2,000 JPY, 5,000 JPY and 10,000JPY notes.
History of The Japanese Yen
Until 1954, the yen was divided into 100 sen and 1,000 rin, with these tiny denominations being phased out of circulation. Despite the fact that Japan has been through enormous devastation throughout World War II, it witnessed an economic miracle in the second half of the 20th century.
The yen emerged as one of the world’s major currencies during this time, competing with the pound sterling and US dollar in global transactions. The symbol for the yen is ¥. Yen comes from a Chinese term for round coins dating back to antiquity (yuan).
The yen was first created in 1869, shortly after the Meiji Restoration, as part of the monetary reform that established a basic unit. The government halted the exchange of clan notes, paper currency issued by feudal lords and circulated since the late 16th century. The Tokugawa shogunate, which ruled Japan from the mid-1500s until 1867, was very strict in regulating currency. The government issued two types of coins: personal and clan money. Personal money consisted of gold mokuna coins (mokuna is another name for dragons), silver mizuhiki or ryohin.
Over the course of World War II, the currency’s value plummeted significantly. In order to balance Japan’s economy, the yen-to-dollar exchange rate was determined at 360 yen per 1 USD as part of the Bretton Woods Agreement.
From 1970 to 1971, the currency was allowed to float after its introduction program was terminated. The yen reached a high of 271 yen per US dollar in 1973 and subsequently fell due to the oil crisis of 1973, rising to 227 yen per US dollar by 1980.
Japanese Yen After the 2008 Economic Crisis
The Japanese government focused on competitive exports and sought to maintain a weak JPY exchange rate by exporting too much. The 1985 Plaza Accord, which lasted for three years, raised the exchange rate from its typical of 239 yen per US dollar to 128 yen in three years, between 1985 and 1988.
It was a major factor in boosting Japanese GDP to almost the same size as that of the United States in 1995, when it resulted in an exchange rate of 80 yen per US dollar, effectively raising the amount of GDP represented by the yen in US dollars. Since then, however, the value of the yen has dropped considerably.
The Bank of Japan’s interest rate is at zero or almost zero percent, and the Japanese government has maintained a tough anti-inflation stance for decades. However, after the 2008 Global Financial Crisis, the deflationary trend was reversed.
In 2013, the Bank of Japan announced it would extend its Asset Purchase Program by $1.4 trillion over two years. The BOJ is attempting to move from deflation to inflation, aiming for 2% price growth. Since sales volumes are too high, the money supply was expected to double.
JPY was named one of the best-performing currencies in 2018 by CNBC. It was expected to surpass the US dollar in terms of energy. Japan’s success in 2017 was aided by ample liquidity from its central bank, government spending, and a growing appetite for Japanese exports around the globe. The strengthening of the US dollar and the improving Japanese economy are often given as causes for the yen’s appreciation.
Yen’s Security Features
One of the most difficult currencies to duplicate in the world is Japan’s. The bills include a variety of anti-counterfeit techniques, including watermarks, holograms, and intaglio ink that raise the print surface when touched. It would be difficult to replicate or scan one quite similar.
The firm also implemented several technological improvements, such as the use of luminescent ink on banknotes, which cause them to glow under black light!