What is the currency of Japan?

Japan's currency, the yen, is one of the most traded and recognisable currencies in the world. Denoted by the symbol ¥ and the ISO code JPY, it sits consistently among the top three most exchanged currencies in global foreign exchange markets, alongside the US dollar and the euro. Not bad for an island nation that only introduced it in 1871.

Where Did the Yen Come From?

The word yen (円, pronounced "en" in Japanese) literally means "round object" — a reference to the round coins that replaced Japan's complicated feudal currency system during the Meiji Restoration. Before 1871, Japan had a chaotic patchwork of regional currencies issued by individual feudal domains. The new Meiji government wanted a single, unified national currency to modernise the economy and compete with Western powers. The New Currency Act of 1871 made that happen.

Japan looked to the Spanish silver dollar — widely used across Asia at the time — as a model for the yen's design and value. The early yen coins were minted in gold and silver, and Japan briefly operated under a silver standard before switching to the gold standard in 1897.

The Yen Today

Modern yen come in both coins and banknotes. Coins range from ¥1 (aluminium, almost weightless) to ¥500, which is one of the most technologically advanced coins in the world, featuring a bi-metallic clad design with sophisticated anti-counterfeiting measures. Banknotes run from ¥1,000 up to ¥10,000.

In 2024, Japan introduced a new series of banknotes — the first redesign in about 20 years. The ¥10,000 note now features industrialist and Enlightenment thinker Shibusawa Eiichi, replacing the long-serving portrait of Fukuzawa Yukichi. The reverse of the ¥1,000 note got an upgrade too, now showcasing Katsushika Hokusai's iconic woodblock print The Great Wave off Kanagawa.

Why Is the Yen So Powerful Globally?

The yen has a reputation as a "safe haven" currency. During times of global economic turmoil, investors tend to flock toward the yen because Japan has historically maintained massive foreign exchange reserves and runs a creditor nation economy — meaning it is owed more by the rest of the world than it owes. When stock markets panic, yen demand typically spikes.

Japan's central bank, the Bank of Japan (founded 1882), manages monetary policy and has been famous in recent decades for its ultra-low — sometimes even negative — interest rate policies, designed to stimulate a stubbornly slow-growing economy.

A Currency That Reflects a Nation

From feudal chaos to one of the world's financial powerhouses in just over 150 years — the yen's story mirrors Japan's own remarkable transformation. It's a small symbol, ¥, but it carries an enormous amount of history behind it.