The Japanese Yen Currency Profile
The Japanese Yen is the third most traded currency in the world, and the most heavily traded currency in Asia.
Currently, there are denominates of 1, 5, 10, 50, 100, and 500 yen coins in circulation since 2009. As for banknotes, the current series was issued in 2004 with 1,000, 2,000, 5,000, and 10,000 yen notes in circulation.
The Japanese government keeps the interest rates relatively low and as such, the yen is often used in “carry trades” with both the US dollar and the Australian dollar.
A carry trade is a strategy in which a low interest rate currency is sold in order to buy a currency with a higher interest rate. A trader who usually uses this technique does so in an attempt to capture the difference between the low interest rate and the higher interest rate which can be substantial, thus making the Japanese yen a good world trading source.
Historically, the Yen originated in 1871 after centuries of ebbs and flows in valuation and devaluation of Japanese currencies. The currency inconsistencies mainly stemmed from the monetary dependencies from China from pre-14th century when the Japanese was unable to make their own currencies. In an effort to rectify this, the Japanese government attempted to make their own currency using both copper and silver which lasted until the 16th century. As European settlers began to settle in Japan using their own money from gold, the currency exchanges within the country became quite confusing. Finally in 1871, the New Currency Act was initiated and Japan began using a new monetary system based on the European decimal system. The yen underwent several monetary valuations during this period until finally landing on the floating exchange rate valuation in 1973.
Japan
1 Japanese Yen
