Japanese Yen (JPY) – Currency Guide

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JPY

Japanese Yen

Symbol

ISO Code

JPY

Central Bank

Bank of Japan (Nippon Ginkō)

Used In

Japan

Subunit

Sen (1/100, not in circulation)

Banknotes

¥1000, ¥5000, ¥10000

Overview

The Japanese Yen (JPY, symbol ¥) is the official currency of Japan and the third most traded currency in the global foreign exchange market, behind the US Dollar and Euro. It accounts for roughly 17% of daily forex turnover. The yen is also widely used as a reserve currency, ranking third globally after the USD and EUR.

Unlike most major currencies, the yen has no subdivisions in everyday use — while the sen (1/100 yen) exists in law, it has not been used in circulation since 1953. Prices in Japan are quoted in whole yen.

History

The yen was introduced in 1871 by the Meiji government as part of a sweeping modernization of Japan's monetary system. The word "yen" (円, en) means "round" in Japanese, reflecting the shape of the coins. Before the yen, Japan used a complex system of gold, silver, and copper coins from the Edo period.

Japan adopted the gold standard in 1897. After World War II, the yen was pegged to the US Dollar at 360 JPY/USD under the Bretton Woods system (1949), remaining fixed until 1971. By 1995 it had reached a record high of 79 yen per dollar.

Bank of Japan

The Bank of Japan (Nippon Ginkō), founded in 1882, is the central bank responsible for issuing yen banknotes and conducting monetary policy. It is notable for its ultra-loose monetary policy, including negative interest rates (introduced in 2016) and yield curve control (YCC), aimed at combating deflation.

In 2024, the Bank of Japan began a historic shift, raising interest rates for the first time in 17 years and ending negative interest rate policy, reflecting growing confidence that Japan was finally achieving its 2% inflation target.

Key Facts

The yen is the third most traded currency in the world, involved in approximately 17% of all forex transactions daily.
Japan is famous for the carry trade — investors borrow yen at low interest rates to invest in higher-yielding foreign assets. A sudden yen appreciation can trigger a global unwinding of these trades.
The ¥10,000 note is the highest denomination; the iconic purple note featuring Fukuzawa Yukichi was replaced in 2024 by a new note featuring Shibusawa Eiichi.
The ¥ symbol is shared with the Chinese yuan (CNY): JPY uses ¥ while CNY is often written as 元 or CN¥.
Japan's aging population and persistent deflationary pressures have shaped its monetary policy for decades, making it unique among G7 economies.
In 2022, the yen fell to a 32-year low against the dollar, prompting the Bank of Japan to intervene in currency markets for the first time since 1998.

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