Article by Currency Information and Research

The Japanese Yen

The Japanese yen is the currency of Japan. Primarily because it is so undervalued, the yen is the third most traded kind of currency, next to the Euro and US dollar. Because it has had a floating, or variable, exchange rate since 1973, its volatility has become a kind of game, and Japanese yen is traded on forex like hotcakes.

Japanese yen comes in both coins and bank notes. Now exclusively issued by the Bank of Japan, yen bank notes have historically come from a variety of sources, like the Ministry of Finance and the Imperial Japanese National Bank. Since World War II, yen notes have been available in denominations of 1,000, 2,000, 5,000 and 10,000. Yen coinage is made in aluminum, nickel, cupro-nickel, brass, and even gold and silver, although the latter two are primarily collectible and would not usually be used in their 100,000-yen denominations. Owning the currency physically is always an option for the investor, although most invest by trading on forex electronically.

Over the history of investing the Japanese yen, the world has seen the currency lose and gain value. After the United States got rid of the gold standard in 1971, Japan decided to opt for a its floating exchange rate. The Japanese government, under the discretion of the Ministry of Finance, has intermittently intervened in the currency market—of which the 1970s and mid 1990s were considerable instances. Preventing the yen from rising too much promotes its trade.

The outlook for investing in yen is presently not as strong as in 2007, when investors were reaping the benefits of a considerably low yen, but the consistent undervaluing of the Japanese yen, when compared the US dollar, suggests that investing in this kind of money will make a strong comeback, for those who are not already eagerly doing so.

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Modified:05/08/2012
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