Background of the Japanese Yen
Upon its introduction in 1872, the yen marked Japan’s first decimal-based currency system. The word “yen” literally translates as “round object” in Japanese, and the currency’s original value was tied to silver.
Japan’s agreement to the terms of surrender on September 2, 1945 marked an important transition point for the country. Trading in the Japanese yen was suspended until 1956. Japan’s post-war economy was based largely on the importation of raw materials and the exportation of manufactured goods – a formula that proved to be exceptionally successful in building national wealth. In a move to further improve the efficiency of its manufacturing during the 1980s and 1990s, Japan began to build factories in the countries from which it was previously importing materials. Notable examples include U.S. assembly plants for Honda and Toyota automobiles.
From 1949 to 1971, the yen was pegged to the US dollar at a rate of USD$1 = ¥360. After this period in which global currencies moved away from the gold standard valuation system, a rate of USD$1=¥308 was briefly adopted. The yen began to free-float in 1973.
The Japanese yen is divided into 100 sen and 1,000 rin, but these fractions are no longer used for currency purposes. Denominations for coins are ¥1, ¥5, ¥10, ¥50, ¥100, and ¥500. Denominations for banknotes are ¥1,000, ¥2,000, ¥5,000 and ¥10,000.