JPY - Japanese Yen

Importance of the Japanese Yen
The Japanese Yen is the third most traded currency in the world, and the most heavily traded currency in Asia. Due to its relatively low interest rates, the Japanese Yen is often used in carry trades with the Australian Dollar and the US Dollar. A carry trade is a strategy in which a currency with low interest rate is sold in order to buy a currency with a higher interest rate.

Early Japanese Currency
The history of currency in Japan began in the 8th Century when silver and copper coins, called the Wado Kaichin, began to be minted in 708. These coins imitated Chinese coins, and when Japan was no longer able produce their own coins, Chinese currency was imported into the country. Over the next few centuries, the inflow of Chinese coins did not meet the demand, so to counter this issue, two privately minted Japanese coins, the Toraisen and Shichusen, entered circulation from the 14th to 16th century. Around the 15th century, the minting of gold and silver coins known as Koshu Kin was encouraged and gold coinage was soon made into the new standard currency. The government later established a unified monetary system that consisted of gold currency, as well as silver and copper coins.

The Modern Day Japanese Yen
By the 19th century, Spanish Dollars were being used in Japan, along with local currencies. In order to simplify and centralize the different coins being used at the time, the Yen (which means 'circle' or 'round object') was created in 1871. The New Currency Act developed a monetary system similar to the European one, with a decimal account system. The Yen operated under a bimetallic standard of gold and silver until 1897, when it was left under a sole gold standard. After World War II, the Yen lost much of its value and in 1971, fixed the exchange rate to the US Dollar at a rate of 308 JPY to 1 USD. This lasted until 1973 when it switched to a floating exchange rate.