Japanese Yen: A Comprehensive Guide to Payment and Exchange

The Japanese Yen is the official currency of Japan, and it's widely used throughout the country. It's represented by the symbol ¥.

You can exchange your money for Japanese Yen at airports, banks, and currency exchange offices. These places usually offer competitive exchange rates.

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In Japan, cash is still the most widely accepted form of payment, but credit and debit cards are becoming increasingly accepted.

Cash is king in Japan, and it's a good idea to carry enough cash with you, especially when traveling to rural areas.

You can use credit cards at many places, but it's essential to check in advance if a business accepts credit cards, as some may only accept cash.

The most commonly accepted credit cards in Japan are MasterCard, Visa, and JCB, with American Express and Diner's Club also widely accepted.

Here's a quick rundown of the types of cards you can use in Japan:

Some credit card companies may charge a surcharge of 1-3% for foreign-issued cards, but you can avoid these fees by using a Wise card.

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Credit and debit cards are increasingly accepted across Japan, but it's always a good idea to check in advance whether a place solely accepts credit cards.

Some places may only accept cash, so it's essential to have a backup plan. Even if you decide to mainly use a credit card, it's still recommended to carry or have access to sufficient cash.

Most credit card companies will charge a surcharge for foreign-issued cards, usually between 1-3%. This can be avoided with a Wise card, which lets you convert at the real exchange rate and doesn't charge foreign transaction fees.

The most commonly accepted cards in Japan are MasterCard, Visa, and JCB, followed by American Express and Diner's Club.

Credit card readers in Japan typically support one of swipe, insert, or tap/contactless payment methods.

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Japan has a vast network of ATMs, making it easy to withdraw yen. You can find them at various locations, including post offices and convenience stores.

Japan Post ATMs are a convenient option, with over 26,000 locations nationwide. They're denoted with the "JP" logo and offer English services.

7-Eleven convenience stores also have a large number of ATMs, with over 20,000 locations across Japan. They're available virtually 24/7 and offer services in 12 languages.

If you're looking for an alternative, Family Mart stores also offer E-net ATMs that can accept international cards, including MasterCard.

Be aware that service charge fees may apply for transactions made outside of traditional operating hours, which are usually 9am-5pm on weekdays.

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If you're looking to buy Japanese yen, you can find it at a large branch of a national bank such as Chase, Bank of America, or Wells Fargo.

These banks typically offer a wide range of foreign currencies, including the Japanese yen.

Airport exchange outlets can also sell you JPY, but be aware that the buy/sell spreads might be wider due to the convenience of the location.

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The official Japanese currency is the Japanese yen, represented by the currency code JPY and the currency symbol, ¥. Locally in Japan, yen is pronounced “en” in Japanese and often accompanied by its kanji, 円, in everyday use.

The Japanese yen is a widely recognized currency, and you'll find it's available in various denominations. You can read more about these denominations in-depth, but for now, just know that there are six coins and four banknotes to keep in mind.

The currency is an essential part of any trip to Japan, and it's worth familiarizing yourself with its different forms to make your travels smoother.

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The Japanese yen is the official currency of Japan, represented by the currency code JPY and the currency symbol ¥.

Locally in Japan, the yen is pronounced “en” in Japanese.

The Japanese yen comes in 10 denominations, including six coins and four banknotes.

In everyday use in Japan, the yen is often accompanied by its kanji, 円.

The fixed rate of the yen to the US dollar has a fascinating history. From 1949 to 1971, the exchange rate was fixed at ¥360 per USD.

After World War II, the yen was heavily devalued due to currency overprinting to fund the war and reconstruction efforts. In 1945, the official conversion rate was set at 15 yen to the USD, but this rate quickly tanked to 50 yen to the USD due to inflation.

In 1948, the peg was adjusted to 270 yen to the dollar, and two years later, it was fixed at ¥360 per USD as part of the Bretton Woods system. This rate was maintained for over 20 years, until the United States abandoned the gold standard in 1971, leading to the eventual adoption of floating exchange rates in 1973.

Here's a brief timeline of the fixed exchange rates:

The Japanese yen's value is determined by the forces of supply and demand in foreign exchange markets. The yen's supply is governed by the desire of yen holders to exchange their yen for other currencies to purchase goods, services, or assets.

The Bank of Japan has kept interest rates low since the 1990s to spur economic growth, which has led to a low interest rate environment. This has prompted investors to borrow yen in Japan and invest it in other countries with higher interest rates, such as the US.

The yen's exchange rate is also influenced by the interest rate differential between Japan and other countries. The table below shows the proportion of daily volume for various currencies in the global foreign exchange market:

The yen has also been affected by the global interest rate environment, with its depreciation accelerating since 2022.

The value of the Japanese yen is determined by several key factors, including supply and demand in the foreign exchange market. This is governed by the desire of yen holders to exchange their yen for other currencies to purchase goods, services, or assets.

The supply of yen in the market is influenced by the Bank of Japan's monetary policy, which has kept interest rates low since the 1990s to spur economic growth. As a result, short-term lending rates have fallen from 3.7% to 1.3% between 1993 and 2008, making it attractive for investors to borrow yen in Japan and invest it in other countries with higher interest rates.

The demand for yen is driven by the desire of foreigners to buy goods and services in Japan and by their interest in investing in Japan. However, the low interest rates and low inflation in Japan have prompted investors to seek higher returns in foreign currencies, contributing to the yen's depreciation.

The table below shows the proportion of daily volume for various currencies in the global foreign exchange market. It highlights the dominance of the US dollar, which accounts for 88.5% of the market, followed by the euro and the Japanese yen.

The yen's value is also influenced by the interest rate differential between Japan and other countries, particularly the US. Japan's prolonged low-interest-rate policy has created a yield differential that prompts investors to seek higher returns in foreign currencies, contributing to the yen's depreciation.

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The Plaza Accord marked a significant shift in the global economy. In 1985, finance officials from major nations signed an agreement affirming that the dollar was overvalued, which led to a rapid rise in the value of the yen.

This agreement had a profound impact on the value of the yen, causing it to nearly double its value relative to the dollar. From an average of ¥239 per US$ in 1985, the yen rose to a peak of ¥128 in 1988.

The yen continued to rise, reaching a new high of ¥123 to US$ in December 1992. This surge in the yen's value made Japan's economy nearly the size of that of the US, at least temporarily.

The post-bubble years were a challenging time for the yen. It declined significantly, reaching a low of ¥134 to US$ in February 2002.

The Bank of Japan's policy of zero interest rates discouraged yen investments, making it less attractive to investors. This led to the carry trade, where investors borrowed yen and invested in better-paying currencies.

The carry trade is estimated to be as large as $1 trillion, further pushing down the yen's value.

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After the 2008 crisis, the trend of the yen's appreciation against other major currencies reversed. The Bank of Japan announced an expansion of their asset purchase program on April 4, 2013, aiming to bring Japan from deflation to inflation.

The Bank of Japan hoped to achieve 2% inflation, a goal that sparked concerns about deliberately devaluing the yen to boost exports. This move was expected to double the money supply.

The commercial sector in Japan worried that the devaluation would trigger an increase in import prices, especially for energy and raw materials. This concern highlighted the potential risks of the Bank of Japan's policy.

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The Japanese yen has long been considered a safe haven, appreciating in value during periods of risk aversion in financial markets.

Low domestic interest rates in Japan amid deflation have encouraged the country's financial institutions and households to seek out higher yields overseas, a tendency known as the carry trade.

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The yen has tended to gain on the U.S. dollar when investment flows reverse in times of market stress.

In mid-2022, however, the JPY slumped to a 24-year low against the U.S. dollar, a significant shift from its traditional safe haven status.

The BoJ kept its policy rate near zero while the Federal Reserve raised the federal funds rate to fight high inflation, contributing to the yen's decline.

Rising consumer prices aggravated by the yen's decline had become a political issue in Japan ahead of national elections.

The average monthly real effective exchange rate is a key indicator of a currency's strength. A higher figure indicates a stronger yen, while a lower figure indicates a weaker yen.

The value of 100 is the 2020 average, serving as a baseline for comparison. This makes it easier to track changes in the yen's value over time.

Data from 1970 onwards are presented in the Broad range, which provides a more comprehensive view of the yen's performance. In contrast, data from 1969 and earlier are presented in the Narrow range.

A table of monthly averages of real effective exchange rates would be helpful in visualizing the data. Unfortunately, the article doesn't provide one.