Other world currency pairs can also affect its rate, such as the USD/CHF and USD/CAD. The pair also reacts to government and political actions, such as the threat of an American-Chinese trade war in 2017, which caused a decline for the USD. Actions taken by either of these institutions can cause a rise or fall in the rate, this can include announcements of new interest rates, monetary policies or new legislation. The USD/JPY pair is greatly influenced by the US Federal Reserve (Fed) and the Bank of Japan (BoJ). As of 2018, the Japanese yen is the third most traded currency in the world and acts as an anchor or reserve currency, after the USD, EUR and GBP. By 1971, the currency had risen in value and was allowed to float.Īlthough it continues to be floated today, the currency is considered to be controlled, with strict government currency intervention. One significant period occurred after the second world war, the yen experienced a significant downturn and introduced a fixed exchange rate. Over its history, the yen has seen periods of appreciation and depreciation. To regulate and mint the newly introduced currency, the Bank of Japan was founded. In doing so, Japan began to use the gold standard measurement used across Europe, as the new yen was tied to the weight of gold – 1.5 g – and silver – 24.26 g. The name means ‘circle’, and the currency was introduced to create a standardised measurement of currency for the nation after the Edo Period system.
Introduced to Japan in the New Currency Act of 1871 by the Meiji government, the yen is the official currency of Japan. What’s the story behind the Japanese yen? It also makes up one-half of seven of the world’s Forex pairs. The USD is the world’s foremost reserve currency, held by numerous countries as part of their foreign exchange reserves. Today, the currency is controlled by the Federal Reserve, the central bank of the United States, established in 1913. This was done as a method of standardisation, following the corrupt ‘continental bill’ system.Īlthough still closely tied to the price of silver and gold, the US dollar has developed as a currency spawning a multitude of coins and notes. These coins were widely used across the European continent and eventually found its way to the New World – America.įollowing the American Revolution, in 1972 the newly formed US Congress instated the ‘thaler’ as the official currency, although at a slightly lighter weight – 27.0 g. In the town, silver ‘thalers’ were minted, each with a standardised weight – 29.2 g.
One of the world’s most influential currencies, the US dollar dates its history back to Joachimstal, now modern-day Germany. The popular pair is one of seven currency pairs with the USD as a base currency. It is one of the most liquid currency pairs, because the US dollar is the first reserve currency in the world with the yen is the fourth. The USD/JPY currency pair is formed from the United States dollar as the base currency and the Japanese yen as the counter currency. USD/JPY What is the USD/JPY currency pair?
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