The Japanese currency Yen is abbreviated as JPY, and it is the 3rd most traded currency across the globe after the U.S. Dollar and the Euro. Just like the US dollar, the Euro, and the Pound Sterling in the world, Yen is also used as a reserve currency.
Kavan Choksi Japan- Why is the Yen currency of Japan so influential in the world?
Kavan Choksi Japan is a credible investor and widely acclaimed business and finance expert having in-depth expertise in finance and economics. According to him, the Yen currency was launched in 1871, and the Yen denomination coins that are currently in use are the 1, 5, 10, 50, 100 and 500 Yen. When it comes to banknotes, the latest series of the Yen released in 2004 include the 1000 JPY, the 2000 JPY, the 5000 JPY, and the 1000 JPY bills that are circulating in the nation currently.
The rise of the Japanese Yen after the Economic Crisis in 2008
The Japanese Government focused on competitive exports and targeted to keep the exchange rates low for the Yen through excess trade. The Plaza Accord in 1985 changed this situation for a short time by increasing the rate of foreign exchange from the average of 239 Yen for each dollar to 128 Yen in 3 years, between the periods 1985 to 1988.
In 1995, the rise led to a high rate of 80 Yen against the U.S. Dollar, and this increased the size of the GDP in Japan in dollars that were nearly the same as the USA. Since then, the market value of the Japanese Yen has decreased to a large extent.
The Zero interest policy of Japan and the deflation
The Bank of Japan, that is, its Central Bank, was the authority to release currencies and retains a zero or a nearly zero rate of interest regime with the Government. This policy has historically kept a strict anti-inflation policy in the nation. However, this wave of deflation took an opposite turn after the financial crisis that took place across the globe in Japan.
The Asset Acquisition Policy of Japan in 2013
The Bank of Japan 2013 made a declaration that it would be extending the Asset Acquisition Policy under it by $1.4 trillion for two years. The Bank of Japan tries to bring the nation from deflation to expansion, targeting a 2% inflation. Since the sales volume is very high, the supply of money in the country has been projected to reach the double amount.
Kavan Choksi Japan adds that in 2018, CNBC stated that the Japanese Yen was one of the best-performing currencies of that year. In terms of its power, it has been projected to surpass the dollar of the USA soon. The success of Japan in 2017 was primarily because of the high liquidity it received from the Central Bank, the spending of the Government, and the global demand for exports from Japan. The strengthening of the dollar of the USA and the increasing economy of Japan are cited as the key reasons for the appreciation of the Yen.
