JPY – Japanese Yen
The official currency of Japan, unlike other developed nation currencies such as the US dollar and the Euro which serve as legal tender in other nations other than their own, the Yen is a strictly national currency and this has been a consequence of the tightly controlled circulation procedures implemented. The word “yen” translates into English literally as “round thing” although a more clumsy definition would be “little circle.” With such a definition, one would be forgiven for assuming that the entire Japanese currency was dependent upon and composed exclusively of coinage, but this is not the case.
As a consequence of the significant influence and power enjoyed by both Spanish and Portuguese merchants and maritime traders, this meant that pesos and Spanish dollars were widespread in Japan in the 17th and 18th centuries, and were used as commonly and widespread as the Tokugawa coinage system.
It was in the year 1871 that the Yen was officially produced and released for circulation and this was a policy introduced by the Meiji government of the day in an attempt to ensure that Japan could remain totally and purely nationalistic as opposed to being diluted by foreign currency. The Yen was introduced also in an attempt to abolish the feudal caste system of samurai and retainers, in order to better enable the transition from martial clan to a bureaucratic stratum of society.
Paper Yen banknotes were not actually produced and circulated for public consumption until the following year, and the actual governing body which has full and absolute authority and responsibility for overseeing this integral process has varied over the years.
Before the outbreak of the Second World War the production of Yen banknotes was the remit of two separate agencies, the Imperial Japanese National Bank and the Ministry of Finance. As a consequence of the widespread damage to the infrastructure endured during the war, the Allies themselves assumed responsibility for the production of the currency.
Now, it is the Bank of Japan that takes control of this process and they have done so since the Second World War.
Although the Second World War had a devastating effect on economies across the world, it would seem that Japan was particularly affected and prejudiced against because of it. In 1949, the US government introduced the Bretton Woods system in an attempt introduce some much needed equilibrium to the Japanese economy and so the exchange rate between Yen and Dollar was set at 340:1 respectively.
In 2002, history repeated itself as the value of the Yen had plummeted to an all time low of 239 to 1 US Dollar and the currency declined further still in 2011 when it reached the atrocious value of 79 to 1 US dollar.
The Yen managed to enjoy a significant tactical advantage as well as something of a historical victory over the US Dollar in 1995 when the value of the Yen reached the record level of 79.75 against the dollar. Undoubtedly, this boom period would have carried on for a much longer period of time, were it not for the timely intervention of the Bank of Japan which sought to stabilise the value of the currency so as to not limit the value of exports.
Nowadays the Yen still remains the 3rd most common reserve currency in the world and has not been toppled from this position by other, emerging currencies that have managed to perform significantly well in recent times. The reason for this is that investors who put their faith in the Yen have considered and have faith in the overall history of the currency rather than a short-lived boom period.
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