What Is JPY (Japanese Yen)?
JPY is the currency abbreviation or the currency symbol for the Japanese yen (JPY), the currency for Japan. The yen is made up of 100 sen or 1000 rin and is often presented with a symbol that looks like the capital letter Y with two horizontal dashes through the center. The yen was originally introduced by the Meiji government as a measure to modernize the country economically.
Understanding JPY (Japanese Yen)
The Japanese yen is the third most traded currency in the foreign exchange market after the U.S. dollar and the euro. It is also widely used as a reserve currency after the U.S. dollar, the euro, and the British pound.
The History of the Yen
The word “yen” means “circle” or “round object.” This yen currency was officially adopted by the Meiji government with the “New Currency Act” of 1871 with the intention of stabilizing the monetary situation. The yen replaced the mon currency of the Tokugawa era. The mon was made mostly of copper. In 1873, silver was devalued, and the yen lost most of its value compared to Canadian and U.S. dollars, both of which had adopted the gold standard. By 1897, the yen was barely worth 50 U.S. cents. That year, Japan also adopted the gold standard, and it became the value of the yen. The sen and the rin were taken out of circulation in 1953.
The yen was pegged to the U.S. dollar in 1949. When the U.S. went off the gold standard in 1971, the yen was devalued again and has been a floating currency since 1973, rising and falling against the dollar with international exchange rates.
The 1, 5, 10, 50, 100 and 500 yen coins are in circulation, which has been the case since 2009. The weight of the 1 yen coin is 1 gram. Interestingly, higher yen denominations are counted in multiples of 10.000 while most Western countries count higher denominations by thousands.
The Yen As a Safe Haven
The Japanese yen is considered a safe haven. The currency often appreciates in value during times of economic certainty. For example, according to Matthew Kerkhoff of Financial Sense, during the financial crisis of 2008 and its aftermath, the yen appreciated by more than 20%. In 2010, concerns about European saw the yen appreciate by 10% percent over the euro. In 2013, in just one day, the yen rose 5% against the euro and 4% against the dollar because of uncertainty surrounding the Italian elections. A similar event occurred again in 2013 when there was uncertainty surrounding the Italian elections.