The Japanese yen (JPY) is the official currency of the land of the rising sun. It is the third most traded currency in the world after the US dollar and the Euro. Unlike most important currencies, the yen is not divisible into cents. The smallest denomination is one unit. As in Chinese, the word yen means “round object” and is commonly used to refer to all currencies, even those of foreign countries.
In the 19th century Japan, like many of its Asian neighbors, used mostly the Spanish dollar as a currency. Japan also used an ancient currency system called Tokugawa coinage, a complex monetary system using gold, silver and bronze coins. The yen was established in 1871 as a silver and gold coinage currency. The yen was defined as 0.78 troy ounces of .9999 fine silver or 1.5 grams of 0.999 fine gold. It was pegged to the Spanish dollar at 1:1 and the ¥5 piece was equivalent to the Argentine gold five peso coin. Japan ceased production of silver yen coins in 1938. During World War II the yen lost much of its value as Imperial Japan was forced to print currency to cover the costs of occupation and war. After WWII the yen continued to lose value and it was pegged to the US dollar in 1949 in order to maintain price stability in Japan. The bimetallic standard was abandoned.
Following the WWII devaluation and the oil crunch of the 1970′s, which saw the value of the yen plummet against commodities, the yen is one of the few currencies that has gained in value over the past decades. It is one of the only currencies that has not yet seen gold overcome its highs of 1980. The yen was floated in 1973 in response to the abandonment of the Bretton Woods system and has since been pure fiat money.
The gold price in Japanese yen was, at its lowest point, ¥18,280 per ounce, while the highest gold price in Japanese yen was ¥204,850 in 1980. Recently an ounce of gold is priced around ¥130,000.
- Japanese gold reserves stand at 765 tonnes, representing three percent of Japan’s foreign reserves.
Bullion coins issued by Japan from 1870 include the following:
- Silver 5, 10, 20 and 50 sen coins
- ¥1 silver coins (24.26 grams of .999 fine silver)
- ¥1 gold coins (1.5 grams of .999 fine gold)
- ¥2, 5, 10 and 20 gold coins
Today’s yen coins are mere scrap metal. The ¥1 coin is made of aluminum and even floats on water. The Japan Mint occasionally produces some commemorative bullion coins