Forex Information - How Does The Japanese Yen Stack Up Against The Us Dollar In Forex Markets? (Part 1)

The Japanese yen is the official currency of Japan and after the euro and the US dollar is the most widely traded form of currency on the Forex. The foreign exchange market can trade currencies from all over the world with each other. There are many individuals who trade on the Forex to make a profit. When doing this, it is important to understand how each form of currency works in relation to others. The Japanese yen is very comparable to the US dollar on the Forex market.

The Japanese yen was first recognized as currency in 1870 and was modeled after the monetary system in Europe. After War World II, the Japanese yen lost most of its value due to instability. Now, the yen has more value and compares more consistently with the US dollar.

The value of the Japanese yen is mostly determined in the foreign exchange markets and by simple supply and demand. When a yen holder wants to exchange that form of currency for other currencies in order to purchase goods, services or assets, the money is traded on the Forex. When the demand for the yen is high, the value goes up. Until the Bretton Woods System collapses in 1971, the value of the Japanese yen was set at Y360 per US $1. Those prices helped stabilize the Japanese economy. When that system was done away with, the value of the yen compared to the US dollar became more competitive. Up to that point in time, the yen was undervalued.

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