The yen is the currency of Japan, officially adopted in 1871. The word “yen” means “circle” or “round object”. The currency is managed by the Bank of Japan, based in Tokyo, and it is one of the most difficult national currencies to counterfeit. Its international code is “JPY”. Just like the U.S. dollar or the euro, the yen is fiat money. Since it is a currency of one of the largest economies in the world, the yen is used as a reserve currency along with the U.S. dollar, the euro, and the pound sterling. It is also the third most traded currency in the foreign exchange market, after the greenback and the euro. Indeed, it is the second most widely held currency, after the U.S. dollar. The USD/JPY is also one of the most popular pairs forex trading.

Yen and Gold

The yen is one of the most important alternatives to the U.S. dollar among fiat currencies. This is why there is often a positive link between the yen and gold: both assets are negatively correlated with the greenback and both are considered safe havens. However, the relationship is not a perfect correlation, as one can see in the chart below. This is because gold is not merely an alternative to the U.S. dollar, but also to the current monetary system based on fiat currencies. Therefore, it some cases the yen and the dollar both lose (or gain) ground against gold.

Yen and Gold Chart