Yen - JPY

The Yen (JPY – Japanese Yen) is Japan national currency; it was introduced during the Meiji era in 1872. The Yen is the third most exchanged currency in the world on the Forex exchange market.

Whereas the Yen lost a great part of its value at the end of World War II, a fixed parity of this currency against the American Dollar (1 USD = 360 JPY) was decided in 1949 as an expanded part of the Bretton Woods Agreements of 1944 that restored for the Dollar the gold standard reference.

Considered undervalued by the end of the 60s and on the eve of the abandonment of the gold standard reference and the transition to the floating exchange rates regime (1973), the Yen increased again in value in the 70s and decreased again after the second oil shock and with the impetus of a Japanese commercial policy that sought to promote competitive exports (USD/JPY = 239 in 1985).

In 1985, the Plaza Agreements put an end to the Dollar rise, and the yen against the other great currencies, decreased to a parity of USD/JPY = 128 from 1988).

A law interest rate policy run by the Bank of Japan in the 90s (it provoked massive « carry trade » operations on behalf of the investors that sell Yens to buy other currencies), mixed with a will to maintain the Japanese export competitiveness in a context of an acute economic crisis in Japan in particular at the beginning of the 90s (inflation, unemployment, decrease of the stock exchange assets caused a new depreciation of the Yen from 1995 to 2002 (USD/JPY = 80 in 1995; USD/JPY = 134 on February 2002).

Since then, the Yen appreciated again, with an acceleration from 2007 and from the subprime crisis, +30% compared to the American Dollar, + 52% compared to the Pound Sterling between 2007 and the end of 2008.

This condition of the exchange clearly isn’t beneficial to the Japanese economy, which saw its exports quickly losing its competitive advantage (USD/JPY = 88 on December 2008). This situation seemed to be adjusted by the beginning of 2009.