Fixed value of the yen to the U.S.

dollar
No true exchange rate existed for the yen between December 7, 1941, and April 25, 1949;
wartime inflation reduced the yen to a fraction of its pre-war value. After a period of instability,
on April 25, 1949, the U.S. occupation government fixed the value of the yen at ¥360 per US$1
through a United States plan, which was part of the Bretton Woods System, to stabilize prices in
the Japanese economy. That exchange rate was maintained until 1971, when the United States
abandoned the gold standard, which had been a key element of the Bretton Woods System, and
imposed a 10 percent surcharge on imports, setting in motion changes that eventually led
to floating exchange rates in 1973.
Undervalued yen
By 1971, the yen had become undervalued. Japanese exports were costing too little in
international markets, and imports from abroad were costing the Japanese too much. This
undervaluation was reflected in the current account balance, which had risen from the deficits of
the early 1960s, to a then-large surplus of US$5.8 billion in 1971. The belief that the yen, and
several other major currencies, were undervalued motivated the United States' actions in 1971.
Yen and major currencies float
Following the United States' measures to devalue the dollar in the summer of 1971, the Japanese
government agreed to a new, fixed exchange rate as part of the Smithsonian Agreement, signed
at the end of the year. This agreement set the exchange rate at ¥308 per US$1. However, the new
fixed rates of the Smithsonian Agreement were difficult to maintain in the face of supply and
demand pressures in the foreign-exchange market. In early 1973, the rates were abandoned, and
the major nations of the world allowed their currencies to float.
Japanese government intervention in the currency market
In the 1970s, Japanese government and business people were very concerned that a rise in the
value of the yen would hurt export growth by making Japanese products less competitive and
would damage the industrial base. The government therefore continued to intervene heavily in
foreign-exchange marketing (buying or selling dollars), even after the 1973 decision, to allow the
yen to float.
Despite intervention, market pressures caused the yen to continue climbing in value, peaking
temporarily at an average of ¥271 per US$1 in 1973, before the impact of the 1973 oil crisis was
felt. The increased costs of imported oil caused the yen to depreciate to a range of ¥290 to ¥300
between 1974 and 1976. The re-emergence of trade surpluses drove the yen back up to ¥211 in
1978. This currency strengthening was again reversed by the second oil shock in 1979, with the
yen dropping to ¥227 by 1980.
Yen in the early 1980s
During the first half of the 1980s, the yen failed to rise in value even though current account
surpluses returned and grew quickly. From ¥221 in 1981, the average value of the yen actually
dropped to ¥239 in 1985. The rise in the current account surplus generated stronger demand for
yen in foreign-exchange markets, but this trade-related demand for yen was offset by other
factors. A wide differential in interest rates, with United States interest rates much higher than
those in Japan, and the continuing moves to deregulate the international flow of capital, led to a
large net outflow of capital from Japan. This capital flow increased the supply of yen in foreign-
exchange markets, as Japanese investors changed their yen for other currencies (mainly dollars)
to invest overseas. This kept the yen weak relative to the dollar and fostered the rapid rise in the
Japanese trade surplus that took place in the 1980s.
Effect of the Plaza Accord

JPY nominal and real effective exchange rates (2005 = 100)

In 1985, a dramatic change began. Finance officials from major nations signed an agreement
(the Plaza Accord) affirming that the dollar was overvalued (and, therefore, the yen
undervalued). This agreement, and shifting supply and demand pressures in the markets, led to a
rapid rise in the value of the yen. From its average of ¥239 per US$1 in 1985, the yen rose to a
peak of ¥128 in 1988, virtually doubling its value relative to the dollar. After declining
somewhat in 1989 and 1990, it reached a new high of ¥123 to US$1 in December 1992. In April
1995, the yen hit a peak of under 80 yen per dollar, temporarily making Japan's economy nearly
the size of the US.[22]
Post-bubble years
The yen declined during the Japanese asset price bubble and continued to do so afterwards,
reaching a low of ¥134 to US$1 in February 2002. The Bank of Japan's policy of zero interest
rates has discouraged yen investments, with the carry trade of investors borrowing yen and
investing in better-paying currencies (thus further pushing down the yen) estimated to be as large
as $1 trillion. In February 2007, The Economist estimated that the yen was 15% undervalued
against the dollar, and as much as 40% undervalued against the euro.
After the global economic crisis of 2008
Comparison of the GNP-weighted nominal exchange rates: CHF and JPY versus CNY, EUR,
USD, and GBP
However, this trend of depreciation reversed after the global economic crisis of 2008. Other
major currencies, except the Swiss franc, have been declining relative to the yen.
On April 4, 2013, the Bank of Japan announced that they would expand their Asset Purchase
Program by $1.4 trillion in two years. The Bank of Japan hopes to bring Japan from deflation to
inflation, aiming for 2% inflation. The amount of purchases is so large that it is expected to
double the money supply. But this move has sparked concerns that the authorities in Japan are
deliberately devaluing the yen in order to boost exports. However, the commercial sector in
Japan worried that the devaluation would trigger an increase in import prices, especially for
energy and raw materials.
On May 9, 2013, the currency weakened to 100 yen = 1 US$ for the first time since April 2009.

Historical exchange rate

Month
Year
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

1949
– 360
1971
1972 308

301.1 270.0 265.8 265.5 264.9 265.3 263.4 265.3 265.7 266.6 279.0 280.0
1973
5 0 3 0 5 0 5 0 0 8 0 0

299.0 287.6 276.0 279.7 281.9 284.1 297.8 302.7 298.5 299.8 300.1 300.9
1974
0 0 0 5 0 0 0 0 0 5 0 5

297.8 286.6 293.8 293.3 291.3 296.3 297.3 297.9 302.7 301.8 303.0 305.1
1975
5 0 0 0 5 5 5 0 0 0 0 5

303.7 302.2 299.7 299.4 299.9 297.4 293.4 288.7 287.3 293.7 296.4 293.0
1976
0 5 0 0 5 0 0 6 0 0 5 0

288.2 283.2 277.3 277.5 277.3 266.5 266.3 267.4 264.5 250.6 244.2 240.0
1977
5 5 0 0 0 0 0 3 0 5 0 0

241.7 238.8 223.4 223.9 223.1 204.5 190.8 190.0 189.1 176.0 197.8 195.1
1978
4 3 0 0 5 0 0 0 5 5 0 0

201.4 202.3 209.3 219.1 219.7 217.0 216.9 220.0 223.4 237.8 249.5 239.9
1979
0 5 0 5 0 0 0 5 5 0 0 0

237.7 244.0 248.6 251.4 228.0 218.1 220.9 224.3 214.9 209.2 212.9 209.7
1980
3 7 1 5 6 1 1 4 5 1 9 9

202.1 205.7 208.8 215.0 220.7 224.2 232.1 233.6 229.8 231.4 223.7 219.0
1981
9 6 4 7 8 1 1 2 3 0 6 2

224.5 235.2 240.6 244.9 236.9 251.1 255.1 258.6 262.7 271.3 265.0 242.4
1982
5 5 4 0 7 1 0 7 4 3 2 9

232.9 236.2 237.9 237.7 234.7 240.0 240.4 244.3 242.7 233.0 235.2 234.3
1983
0 7 2 0 8 6 9 6 1 0 5 4
 233.9 233.6 225.5 224.9 230.6 233.2 242.7 242.2 245.1 246.8 243.2 247.9
1984
5 7 2 5 7 9 2 4 9 9 9 6

254.1 260.3 258.4 251.6 251.5 248.9 241.7 237.2 236.9 214.8 203.8 202.7
1985
1 4 3 7 7 5 0 0 1 4 5 5

200.0 184.6 178.8 175.5 166.8 167.8 158.6 154.1 154.7 156.0 162.7 162.1
1986
5 2 3 6 9 2 5 1 8 4 2 3

154.4 153.4 151.5 142.9 140.4 144.5 150.2 147.5 143.0 143.4 135.2 128.2
1987
8 9 6 6 7 2 0 7 3 8 5 5

127.4 129.2 127.2 124.8 124.7 127.2 133.1 133.6 134.4 128.8 123.1 123.6
1988
4 6 3 8 4 0 0 3 5 5 6 3

127.2 127.7 130.3 132.0 138.4 143.9 140.6 141.2 145.0 141.9 143.5 143.6
1989
4 7 5 1 0 2 3 0 6 9 5 2

145.0 145.5 153.1 158.5 153.5 153.7 149.2 147.4 138.9 129.7 129.0 133.7
1990
9 4 9 0 2 8 3 6 6 3 1 2

133.6 130.4 137.0 137.1 138.0 139.8 137.9 136.8 134.5 130.8 129.6 128.0
1991
5 4 9 5 2 3 8 5 9 1 4 7

125.0 127.5 132.7 133.5 130.5 126.9 125.6 126.3 122.7 121.1 123.8 123.9
1992
5 3 5 9 5 0 6 4 2 4 4 8

125.0 120.9 117.0 112.3 110.2 107.2 107.7 103.7 105.2 106.9 107.8 109.7
1993
2 7 2 7 3 9 7 2 7 4 1 2

111.4 106.1 105.1 103.4 104.0 102.6 100.1

1994 98.54 99.86 98.79 98.40 98.00
9 4 2 8 0 9 7

100.3 100.6 101.8 101.8

1995 99.79 98.23 90.77 83.53 85.21 84.54 87.24 94.56
1 8 9 6
 105.8 105.7 105.8 107.4 106.4 108.8 109.2 107.8 109.7 112.3 112.2 113.7
1996
1 0 5 0 9 2 5 4 6 0 7 4

118.1 123.0 122.6 125.4 118.9 114.3 115.1 117.8 120.7 121.1 125.3 129.5
1997
8 1 6 7 1 1 0 9 4 3 5 2

129.4 125.8 128.8 131.8 135.0 140.3 140.6 144.7 134.5 121.3 120.6 117.4
1998
5 5 3 1 8 5 6 6 0 3 1 0

113.1 116.7 119.7 119.6 122.1 120.8 119.7 113.3 107.4 106.0 104.8 102.6
1999
4 3 1 6 4 1 6 0 5 0 3 1

105.2 109.3 106.6 105.3 108.1 106.1 107.9 108.0 106.7 108.3 108.8 112.2
2000
1 4 2 5 3 3 0 2 5 4 7 1

117.1 116.1 121.2 123.7 121.8 122.1 124.6 121.5 118.9 121.3 122.3 127.3
2001
0 0 1 7 3 9 3 3 1 2 3 2

132.6 133.5 131.1 131.0 126.3 123.4 118.0 119.0 120.4 123.8 121.5 122.1
2002
6 3 5 1 9 4 8 3 9 8 4 7

118.6 119.2 118.4 119.8 117.2 118.2 118.6 118.8 115.0 109.5 109.1 107.8
2003
7 9 9 2 6 7 5 1 9 8 8 7

106.3 106.5 108.5 107.3 112.2 109.4 109.3 110.4 110.0 108.9 104.8 103.8
2004
9 4 7 1 7 5 4 1 5 0 6 2

103.2 104.8 105.3 107.3 106.9 108.6 111.9 110.6 111.0 114.8 118.4 118.6
2005
7 4 0 5 4 2 4 5 3 4 5 0

115.3 117.8 117.3 117.1 111.5 114.5 115.5 115.8 117.0 118.5 117.3 117.2
2006
3 1 1 3 3 7 9 6 2 9 3 6

120.5 120.4 117.2 118.8 120.7 122.6 121.5 116.7 115.0 115.7 111.2 112.2
2007
9 9 9 1 7 4 6 4 1 7 4 8
 107.6 107.1 100.8 102.4 104.1 106.8 106.7 109.2 106.7 100.2
2008 96.89 91.21
0 8 3 1 1 6 6 4 1 0

2009 90.35 92.53 97.83 98.92 96.43 96.58 94.49 94.90 91.40 90.28 89.11 89.52

2010 91.26 90.28 90.56 93.43 91.79 90.89 87.67 85.44 84.31 81.80 82.43 83.38

2011 82.63 82.52 81.82 83.34 81.23 80.49 79.44 77.09 76.78 76.72 77.50 77.81

2012 76.94 78.47 82.37 81.42 79.70 79.27 78.96 78.68 78.17 78.97 80.92 83.60

101.0 100.0 103.4

2013 89.15 93.07 94.73 97.74 97.52 99.66 97.83 99.30 97.73
1 4 2

103.9 102.0 102.3 102.5 101.7 102.0 101.7 102.9 107.1 108.0 116.2 119.2
2014
4 2 0 4 8 5 3 5 6 3 4 9

118.2 118.5 120.3 119.5 120.8 123.3 123.1 120.1 119.9 122.5 121.7
2015 123.7
5 9 7 7 2 1 7 3 9 8 8

118.1 115.0 113.0 109.7 109.2 105.4 103.9 101.2 101.9 103.8
2016
8 1 5 2 4 4 7 8 9 1

2017

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Year
Month