CLASS: NEW MEXICO
SUBJECT: MONEY AND CAPITAL MARKET
Yen (sign: ¥, code: JPY) is the currency of Japan. It is the third most-traded currency in the foreign exchange market after the Euro and the United States dollar. It is also widely used as a reserve currency after the U.S. dollar, the Euro and the Pound sterling.
Pronunciation and etymology
The Japanese pronunciation is "en", the spelling and pronunciation "yen" is standard in English. This is due to a historical Portuguese transliteration which included the letter y based on Romanization of an obsolete writing of the word which included the kana ゑ (ye/we). Similar examples of this Romanization are found in such words as Yebisu, Iyeyasu, and Yedo, although the actual pronunciation was e. The word was borrowed from the Chinese (Mandarin) yuán (元 or 圆)
The yen was introduced by the Meiji government in 1872 as a system resembling those in Europe. The New Currency Act of 1871 stipulated the adoption of the decimal accounting system of yen (1, 圓), sen (1⁄100, 錢), and rin (1⁄1000, 厘), with the coins being round and cast as in the West. The yen was legally defined as 0.78 troy ounces (24.26 g) of pure silver, or 1.5 grams of pure gold. The same amount of silver is worth about 1181 modern yen, while the same amount of gold is worth about 4715 yen. The Act also moved Japan onto the gold standard. The sen and the rin were eventually taken out of circulation at the end of 1953.
Fixed value of the yen to the US dollar
The yen lost most of its value during and after World War II. After a period of instability, in 1949, the value of the yen was fixed at ¥360 per US$1 through a United States plan to stabilize prices in the Japanese economy. That exchange rate was maintained until 1971, when the United States abandoned the gold standard, which had been a key element of the Bretton Woods System, and imposed a 10 percent surcharge on imports, setting in...