Considerable money flows between the United States and Japan in the form of remittances each year. In 2016, more than U.S. $1.3 billion was sent from the U.S. to Japan. In the same year, around U.S. $124 million was sent from Japan to the U.S. These numbers, incidentally, do not take into account the trade relations between the two countries.
The USD/JPY currency pair is nicknamed Ninja or Gopher in the forex industry. This pair is among the few that are listed as majors, and it accounts for around a fifth of the forex trade volume on most days.
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Estimates suggest that around U.S. $5.1 trillion changes hands in the forex market every day. The U.S. dollar accounted for over 87% of the international forex market turnover in April 2016, which made it the world’s most commonly traded currency.
The use of the U.S. dollar as a sole currency is found through the Caribbean, two British Overseas Territories, the British Virgin Islands, as well as Turks and Caicos Islands. Some of the countries where the U.S. dollar is used alongside other currencies include Zimbabwe, Belize, Panama, Haiti, Costa Rica, Myanmar, Cambodia, and Liberia.
The U.S. dollar has been the official currency of the United States since 1792. The complete decoupling of the USD from the gold standard happened in 1973. The U.S. dollar is the most commonly held reserve currency, which is why significant volumes of it can be found with central banks of most countries.
|Nicknames||Buck, moolah, paper, dough, dead presidents, |
bones, greenback, green
|Bank notes||$1, $2, $5, $10, $20, $50, $100|
|Coins||1c, 5c, 10c, 25c, 50c, $1|
The Japanese yen is the world’s third most traded currency, accounting for more than 21.5% of the international forex market turnover in April 2016. It is also the most heavily traded and most liquid currency in Asia.
The yen has been the official currency of Japan since 1871. It is also used as legal tender in Zimbabwe, alongside other currencies such as the U.S. dollar, the euro, the British pound, the South African rand, the Indian rupee, the Botswana pula, the Australian dollar, and Chinese renminbi.
After the devaluation of the U.S. dollar in 1971, Japan, according to the Smithsonian Agreement, agreed to a new fixed exchange rate of U.S. $1 = ¥308. However, supply and demand pressures in the forex market led to the abandonment of fixed rates by several countries, and most major currencies along with the yen went the free-float way.
The use of the Japanese yen as a reserve currency is common, and it comes after the U.S. dollar and the euro.
|Sub unit||1/100 - sen|
1/1000 - rin
|Bank notes||JPY 1000, JPY 2000, JPY 5000, JPY 10,000|
|Coins||JPY 1, JPY 5, JPY 10, JPY 50, JPY 100, JPY 500|
U.S. Dollar / Japanese Yen Historical Rates
The U.S. dollar has performed better than the Japanese yen over time. While the Japanese economy has witnessed periods of struggle in the 21st century, the yen has remained a safe haven currency. This is because the yen tends to appreciate during times of market turmoil and investor stress, as was seen during the Great Depression.
On the other hand, a strong global economy and a booming stock market typically cause the yen to weaken. This was evident during the post-recession period, when the yen started losing its value against the U.S. dollar. At one point, in 2013, the Bank of Japan had to step in to carry out quantitative easing.
There is a positive correlation between the USD/JPY and USD/CHF currency pairs. This is because both rely on the U.S. dollar as the base currency and also because the Swiss franc is regarded as a safe haven currency. Conversely, there is a negative correlation between USD/JPY and gold. For instance, when USD/JPY prices fell, prices of gold increased.
In recent times, the U.S. dollar was weakest against the Japanese yen from 2011 to 2012. The dollar got to its pre-2008 levels by 2014, and it continues its strong run until now.
USD/JPY in the last five years
|U.S. $1 =|
|1 July, 2013||JPY 97.88|
|1 July, 2014||JPY 102.80|
|1 July, 2015||JPY 123.94|
|1 July, 2016||JPY 102.06|
|1 July, 2017||JPY 110.25|
USD/JPY in the last five months
|U.S. $1 =|
|1 Feb, 2018||JPY 109.41|
|1 March, 2018||JPY 106.24|
|1 April, 2018||JPY 106.27|
|1 May, 2018||JPY 109.86|
|1 June, 2018||JPY 109.55|
What Affects USD/JPY Rates?
There has been a close correlation between the USD/JPY currency pair and U.S. treasuries. USD/JPY prices tend to weaken when there is a rise in treasury bonds, bills, and notes. Interest rates in the U.S. and Japan have a further bearing on this currency pair, as do policies of the U.S. Federal Reserve.
Japan and China purchase dollars to stabilize their currencies by creating cheaper exports, and this, along with Japan’s dependence on imports, tends to affect USD/JPY rates. A good Japanese GDP translates into a strong yen, and does the country’s trade surplus. The value of the yen in comparison to the dollar is also affected by Japan’s manufacturing industry.
If to wish to send money from the United States to Japan or the other way around, bear in mind that the cost of your transfer depends on the USD/JPY exchange rate you get. While several specialist companies facilitate money transfers between these countries, comparing the top alternatives might be worth your while.