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Definition

The currency of Japan. The yen is the third most heavily traded currency in the world (after the US dollar and the euro). It began as a free-floating currency after Bretton Woods in 1971 at 360 yen to the US dollar. Since then it has been strengthening against the US dollar. This has always been a problem for Japan because it is a country with relatively few natural resources. It has no coal, iron or oil and only 15% of its land is arable. This forced it to become a manufacturing nation which imported raw materials and then exported finished goods. As its currency strengthened its exports became progressively more expensive on world markets. The Japanese response to this was to increase efficiency and become even more productive.  Today the yen trades for around 158 yen to the US dollar and it is still in a long-term strengthening pattern.

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