The official currency of Japan is the yen. It is the fourth most-used currency for global national reserves, behind the U.S. dollar, euro and U.K. pound sterling. The yen is also the third most-traded currency in world markets, behind the U.S. dollar and the euro, with a 19.0 percent market share as of April 2010. Because of the low value of the yen base, it and many other East Asian currencies are counted using a 10,000-unit multiple called a man, whereas most other currencies are counted using a 1,000-unit multiple base. Just as the Chinese currency, the yuan, the word yen in Japanese translates to “round object” in English. The name comes from the silver coins that were brought in by the Spanish since the 17th century. In the 19th century, many local coins began to be minted in a similar likeness. The Japanese yen was first adopted as a silver coinage monetary system in 1871. The yen was introduced as a decimal currency, replacing the complex Tokugawa coinage that had been in use since the Edo period. The first yen consisted of either 0.78 troy ounces of silver or 1.5 grams of gold. However, two years later, the silver standard was dropped.
After World War II, the yen was almost completely devalued and remained highly unstable until 1949 when it was pegged to the U.S. dollar at the rate of 360 JPY: 1 USD under the Bretton Woods System. When the U.S. abandoned the gold standard, the Bretton Woods System fell apart, and the yen has been floating on the exchange market since 1973. The yen was undervalued due to the pegged exchange rate, and in the decades after floating, it was greatly increased in value to approximately 80 JPY: 1 USD. Many world governments predicted this rise in value, so the rate of rise was strictly controlled by the Japanese government. The yen lost value several times during this period, but it always recovered.
When the yen was introduced, silver coins were minted in values of 5, 10, 20 and 50 sen, the decimal unit of the yen. A silver 1 yen coin was also introduced along with gold coins valued at 2, 5, 10 and 20 yen. Today, yen coins start at 1 yen and go up to 500 yen. Banknotes are available in denominations of 1000 yen, 2000 yen, 5000 yen and 10000 yen.