What is the Currency of Japan?

By Sharon Omondi on August 21 2019 in Economics

Japanese yen coins.
Japanese yen coins.

The currency of Japan is the Japanese Yen, normally symbolized by ¥. Yen is derived from the Japanese word "Yen" which means "round object" or "circle". The currency code for the Japanese Yen is JPY. The Osaka Mint Bureau is responsible for the minting, control, and circulation of the Japanese currency. Japanese Yen is the most heavily traded currency in Asia and among the most traded currencies in the world’s foreign exchange markets. This is attributed to the currency’s relatively low-interest rates compared to other currencies like the Australian dollar and the US dollar.

History of the Japanese Yen

The minting of silver and gold coins called the WadoKaichin began in the 8th century. The coins resembled Chinese coins. However, at some point, Japan was unable to produce its own coins. Therefore, they began purchasing the Chinese currency for their own use. However, before long the supply of the Chinese coins could not meet the ever-increasing demand by the locals for business purposes. As such, Japan employed the services of a private company to mint more coins. The coins were injected into the Japanese economy and used between the 14th and 16th centuries. The two coins were named Toraisen and Shichusen.

In the 15th century, the government started producing Koshu Kins which were silver and gold coins. It later established a uniform monetary system made up of gold, silver, and copper coins. In the 19th Century, in addition to the Koshu Kins coins, Japanese locals could also use the Spanish dollars. The government introduced the Yen in 1871. It was a strategy of centralizing the various coins that existed at the time. The value of the Yen was steady until the end of World War II when it depreciated. Subsequently, in 1971, the Yen was pegged to the US dollar at a fixed exchange rate of 308 Japanese Yen per every 1 US dollar. The Japanese Yen operated at fixed rate until 1973 when the government resorted to a floating exchange rate.

Banknotes and Denominations

One Japanese Yen can be sub-divided into 100 Sen. The Japanese Yen coins are in denominations of 500, 100, 50, 5, and 1. The coins feature images such as flowers, temples, trees, and rice. They are made of nickel, cupro-nickel, bronze, aluminium, and brass except for the one yen coin which is entirely made of aluminum which enables it to float on water.

Banknotes are in denominations of 1,000, 10,000, and 5,000. The 2,000 banknote exists but is rarely used by the public. Banknotes feature images of Mount Fuji, flowers, and animals such as mice, chicken, horses, and lions. These features have made the Japanese bank notes the world’s most difficult bill to counterfeit.

Japanese Yen Exchange Rate

The dollar to yen currency exchange rate usually sits somewhere around 1 US dollar per = 99.3774 Japanese Yen. For travelers, it is crucial to know that currency exchange in Japan can be done at the airport, post office, or an authorized foreign exchange bank. Cash is more acceptable than plastic money. However, this may change in the future due to globalization.

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