The yen (en) was established as the official unit of currency in 1871. The name en was used because it means round, as opposed to the oblong shape of previous coinage. One hundredth of a yen is called a sen, although this unit is so small that it is only mentioned today in the financial markets. The Bank of Japan, established in 1882, issued its first bank notes in 1885.
At various times during its history, the yen has been pegged to the silver standard, the gold standard and the US dollar. From 1949 to 1971 the rate was 360 yen to the dollar, which was then changed to 308 yen to the dollar. This rate held for two years but problems with US trade imbalances led to the devaluation of the dollar against gold. In 1973, the yen, along with other major currencies, moved to a floating exchange rate system. In the 1980's and 90's, the yen became increasingly used in international financial transactions and continued a steady climb against the dollar. It reached a peak rate of around 80 yen to the dollar in 1994 and was around 108 yen in October 1999. The current unstable global financial situation affected the Japan's economy greatly. Stability of the Japanese yen forex index is hugely dependent on the market situations in the United States, Europe and other major consumers of Japan's high-tech exported goods - the country's major source of income.
Now the official international symbol indicating the Japanese Yen is ?.
Over the years, there have been proposals to denominate the yen by making it equal to the current 100 yen. The latest proposal came in late 1999, as fears grew that the dollar and the euro would overshadow the yen unless it was denominated to an equivalent value.
The Japanese government announced in October 1999 plans to issue a 2,000 yen note in time to commemorate the G8 summit to be held in Okinawa the following year. The new note was expected to give a boost to the economy, but it ended up barely making an impression. In fact, ?2,000 notes are a rare sight today.
In 2002, a redesign of bank notes was announced, with new people appearing on the 1,000 and 5,000 yen notes. The redesign was to allow for the use of the latest anti-counterfeiting techniques. The redesigned notes appeared on November 1, 2004.
New ?1,000, ?5,000 and ?10,000 notes were issued in November, 2004. But the old notes still remained in circulation for about two years. The ?1,000 note features world-renowned bacteriologist Noguchi Hideyo; the ?5,000 note has Higuchi Ichiyo, one of Japan's earliest feminist novelists; the ?10,000 notes keeps Fukuzawa Yukichi. All three notes incorporate the latest in anti-forgery design.
The 500, 100 and 50 yen coins are made of nickel, the 10 yen of bronze, the 5 yen of copper and the 1 yen of aluminum. The 5 Yen coin has a hole in the middle of it. The 50 Yen coin also has a hole in the middle of it. (A long time ago, men carried these coins with a hole in the middle of them around their necks tied together with a string). Now the 50 yen and more often the 5 yen coin are considered lucky and often used in charms.