Have you noticed and wondered why there are no cents in the Japanese currency? Is it because it has devalued and reached that point? Don't the Japanese get confused when buying? Has the yen always been like this, or has it been fractioned?
When we talk about the value of the yen to people, the first statement they make is that the currency is overvalued. Always confused when trying to explain that there is no fractionation or cents in the Japanese currency.
In this article, we will cover the following topics:
Is the Japanese currency IENE devalued?
For a currency to be considered devalued, it needs to increase the prices of things, discourage investment and end industrialization. Japan is quite the opposite of that with an inflation of 1%. Quite different from the cruzado and the cruzeiro where inflation reached 2000 and currencies were still fractioned (it had cents or decimals).
The Japanese yen (円 - en) is made up of 1, 5, 10, 50 and 100 yen coins, while its banknotes are 1,000, 2,000, 5,000 and 10,000 yen. About 100 yen is equivalent to 0.90 cents in dollars (2018) making the currency cheaper than the dollar itself.
In Japan, you earn more than 700 yen per hour of work, making a 100 yen coin as insignificant as 1 real. Fortunately with 100 yen you can buy a drink, a chocolate or a snack. I think of the Japanese yen like I think of the dollar, just put a comma you would imagine before the last 2 zeros.
Although Japan's currency is currently as valuable as the dollar, the yen's biggest reason for not being fractioned was actually the currency's devaluation in the past.
yen is not fractional? Japanese currency without cents?
Now that we know that the yen is not devalued, we must understand why the Japanese yen currency is not fractional, has no cent measures or decimal values. The answer is simple, the people preferred it that way!
In 1953 a law called the Shōgaku tsūka no seiri oyobi shiharaikin no hasūkeisan ni kan suru hōritsu [小額通貨の整理及び支払金の端数計算に関する法律] which literally means Small Currency Disposal Law and Fractional Rounding of Payments.
Some may find this decision strange, but it has been like this for many years and the Japanese do not think about changing just for the convenience of the rest of the world. There is no difficulty in denoting 50,000 instead of 500.00. Especially for Japanese people where counting numbers in the language changes to 1 万 [ichi man] on reaching 10,000.
The only valid reason currently for cutting zeros in the Japanese yen would be inflation. This was exactly what happened to the yen before 1953, where fractional measures existed before the yen. That is! There were cents in Japan…
The yen has already been split, meet the sen!
The yen was introduced in Japan in the year 1871 and had not one, but two divisions called RIN [厘] and SEN [銭]. 10 RIN is equivalent to 1 SEN, while 100 SEN is equivalent to 1 IENE. That was how things worked in Japan until 1953.
There were 1 and 5 RIN coins, followed by 1, 2, 5, 10, 20 and 50 SEN. At the time of fractionation, the yen was 1, 2, 5, 10, 20, 50, 100 and 500. In Japan, there were even coins that were not entirely round as in the case of some versions of 1 SEN and 1 YEN.
I question the need for RIN, but SEN was already the equivalent of our penny. The ideogram of sen [銭] can still be found in words like sat [銭湯] which means public baths. Referring to the low price of bathrooms in the old days.
Currently, the 1 RIN became a relic, since its last coinage was from 1900. One of the first RIN was auctioned for more than 60,000 dollars. We have already written a little about the yen value over the ages, we recommend reading the article to understand the history of the Japanese currency that we will highlight below.
WHY WAS YENE NO MORE FRACTIONAL?
Before 1900 the yen used silver as the country's monetary standard, but that silver standard depreciated and lost to the gold standard. It was not until 1897 that Japan was able to switch to the gold standard by winning the Sino-Japanese war, but it was too late and the yen depreciated at only half a US dollar.
The Gold Standard was abandoned by Japan because of the Great Depression of 1930. Things got worse in World War II when Japan suffered from super inflation causing the yen to lose more than 99% of its value making it what it is today.
The USA imposed the Bretton Woods System in Japan making 360 yen is worth a dollar. With this exchange rate, sen and rin fell out of use and were officially discontinued in 1953 with the aforementioned law.
When the Bretton Woods System collapsed in 1971, Japan's currency started to fluctuate. All of this thanks to the country's effort to become one of the largest economic and industrial potentials in the world.
|Date||# yen = $1 US|
As such, the Yen was really left without cents because of currency devaluation and inflation. Like the real plan, this strategy worked and improved the country's economy. Only in this case the Japanese decided to eliminate the decimal and fractional values of their currency for good.
I hope this article has answered all your questions about the yen penniless and the devaluation of the Japanese currency and how Japan has turned the corner on making its currency valuable again. If you liked the article, share and leave your comments.