What is 'JPY'?

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 the symbol ¥. The yen was originally introduced by the Meiji government as a measure to modernize the country economically.

BREAKING DOWN 'JPY'

After the U.S. dollar and the euro, the Japanese Yen is the most traded currency in the foreign exchange market. The Japanese yen is also widely used as a reserve currency after the U.S. dollar, euro, and British pound.

The History of the Japanese Yen

In May 1971, the yen was officially adopted by the Meiji government and was first seen in 1872 when it replaced the mon currency of the Edo period. It lost most of its value by the end of World War II and 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 yen, which is fundamentally a unit of the U.S. dollar, originated from Spanish pieces of eight - a common term in the American Colonies for silver coins worth approximately one ounce.

The Japanese Economy

Japan has a strong economy with a robust industrial base. Japan also has many technologically advanced companies from the auto manufacturing, machinery, steel and nonferrous metals, electronics, chemicals, shipping, textiles, and processed foods. According to Oanda, a leading currency data company, 13% of Japan's land is devoted to agriculture. In addition, Japan accounts for nearly 15 percent of the global fish catch, second to China. Japan's unemployment rate was 2.5% in February 2017.

The Strengthening of the Yen

The Bank of Japan (BoJ), Japan's central bank, is responsible for encouraging growth and minimizing inflation. Deflation, however, has been a problem for the nation for many years, and the BOJ has pursued a policy of low rates to stimulate demand and economic growth.

In 2018, the yen was reported to be one of the best-performing currencies that year by CNBC, and it was expected to exceed the U.S. dollar in terms of strength. Japan's performance in 2017 was strong due to global demand for its exports, government spending and liquidity from the Bank of Japan. The weakening of the U.S. dollar and Japan's growing economy are also cited as the reasons for the yen's appreciation. Morgan Stanley analysts considered that the yen was a better investment prospect as a safe haven compared to the U.S. dollar.

 

 

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