Regional Trading Agreements
Historial Exchange Rate Regime of Asian Countries
 
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  Untitled Document
Japan
  The currency of Japan is the Yen. All currency matters in Japan were administrated by the Ministry of Finance (MOF), with the cooperation of the Bank of Japan (BOJ) and the Ministry of International Trade and Industry (MITI), which also handled export and import licensing. However, most of the authority for approving normal payments was delegated to the authorized banks (referred to as foreign exchange banks).

Before 1949, foreign trade was controlled directly by the government and there were multiple exchange rates. Although direct control was abolished in 1949, a new system to control foreign trade was introduced for the transition to a market economy. The Japanese government could execute import quota through this system. Besides, Japan shifted from a regime of plural exchange rates to a regime of single exchange rate in April 1949. This regime continued to operate until trade liberalization progressed under the pressure from overseas in the early 1960s. (Ito, p.311-315)

The intervention currency of Japan was U.S. Dollar. Japan maintained a fixed exchange rate of ¥360.00 per U.S. Dollar until August 1971. In 1971, the Yen was allowed to float above its fluctuation ceiling and an Effective Rate with a fluctuation range was established in December. With continuous devaluation of U.S. Dollar, it forced BOJ to place a controlled on exchange rate, in a floating basis. Afterwards, the Effective Rate of Yen was set to be float freely. Since the introduction of a floating exchange rate system in February 1973, the Japanese economy has experienced large fluctuations in foreign exchange rates, with the yen on a long rising trend. In the same year, another rate called Interbank Rate was set up. The Yen was to be determined on the basis of underlying demand and supply conditions in the exchange markets. The BOJ only intervened in the currency market when the Yen fluctuated disorderly. The exchange rate regime was not changed much in Japan.

Major sources of reference include:
1) World Currency Yearbook (WCY)
2) IMF Annual Report on Exchange Arrangement and Exchange Restriction (IMF)
3) Ito, Takatoshi and Krueger, Anne O. 1999. Changes in Exchange Rates in Rapidly Developing Countries: Theory, Practice and Policy Issues. Chicago and London: The University of Chicago Press. (Ito)
   
 
Date
Changes to the exchange rate regime
Japanese Yen per U.S. dollar
25 April 1949The Japanese Yen was devalued from an Official Rate of ¥270.00 to ¥360.00 per U.S. Dollar. (WCY 1984, p.413)  
1 April 1964Japan formally accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement. (IMF 1976, p.270)  
28 August 1971The Yen was permitted to float above its fluctuation ceiling of ¥357.30 per U.S. Dollar. (WCY 1984, p.413)  
20 December 1971Following the devaluation of U.S. Dollar on 18 December, the Yen was upvalued 7.66% in terms of gold, thus creating a new Official Rate of ¥308.00 per U.S. Dollar.

An Effective Rate was established with a 4.5% fluctuation range having limits set at ¥301.07 and ¥314.93 per U.S. Dollar. (WCY 1984, p.413) 

 
February 1973The U.S. dollar devaluation in February triggered another upvaluation of the Yen through controlled floating (Effective Rate). (WCY 1984, p.414)  
14 February 1973Theoretical Official Rate was realigned to ¥277.20 per U.S. Dollar, based on the Japanese currency's unchanged gold content. (WCY 1984, p.413)

At the same time, the Effective Rate of Yen was set free to float upward and no margins were maintained in respect of exchange transactions. The Yen was to be determined on the basis of underlying demand and supply conditions in the exchange markets, resulting in an Interbank Yen Rate for all transactions. However, the authorities reserved the right to intervene in the currency markets when necessary in order to counter disorderly conditions. The principal intervention currency was the U.S. Dollar. (WCY 1990/93, p.445) 

 
1975Authorized banks could be freely carried out spot and forward exchange transactions with nonresident banks and among themselves; their forward transactions with resident customers must have a permitted underlying transaction. (IMF 1976, p.270)  
31 December 1975 305.000 
5 January 1976Foreign banks in Japan were permitted to increase the outstanding total of their conversions of foreign currencies into Yen. (IMF 1977, p.272)  
31 December 1976 293.000 
30 December 1977 240.000 
29 December 1978 194.600 
31 December 1979 239.700 
31 December 1980 203.600 
31 December 1981 220.250 
31 December 1982 235.300 
30 December 1983 232.000 
1 January 1984The authorized banks required the permission for them to carry out forward exchange transactions with resident customers outside the basis of actual demand. (IMF 1984, p.289)  
31 December 1984 251.600 
31 December 1985 200.600 
31 December 1986 160.100 
1987Forward exchange contracts may be negotiated against foreign currencies quoted on the Tokyo exchange market and in other major international foreign exchange markets. There were no officially set rates in the forward market, and forward exchange transactions were based on free market rates. (IMF 1988, p.290)  
31 December 1987 122.000 
30 December 1988 125.900 
29 December 1989 143.450 
14 August 1990Japan notified the Fund that certain restrictions were imposed on the making of payments and transfers for current international transactions to the Government of Iraq and persons within the territories of Iraq and Kuwait. (IMF 1991, p.265)  
29 December 1990 134.400 
18 March 1991Restrictions on the making of payments and transfers for current international transactions to the Government of Iraq and persons within the territories of Kuwait were lifted. (IMF 1992, p.261)  
31 December 1991 124.850 
10 July 1992Japan notified the Fund that, in compliance with United Nations Security Council Resolution No. 757 (1992), certain restrictions had been imposed on the making of payments and transfers for current international transactions in respect of the Federal Republic of Yugoslavia (Serbia and Montenegro). Sanctions against the Federal Republic of Yugoslavia were not limited to current transactions. (IMF 1993, p.265)  
31 December 1992 124.650 
31 December 1993 111.850 
31 December 1994 111.850 
29 December 1995 102.905 
1 April 1998The Foreign Exchange Law was amended, eliminating the authorized foreign exchange bank system, which required that all foreign exchange transactions be conducted through authorized banks and that of the MOF provided prior approval for large foreign currency transactions. All companies, including securities firms and nonfinancial companies, were permitted to trade foreign currencies. Banks were still required to notify the authorities of their foreign transactions on an ex post basis. (IMF 1999, p.453)  

Notes:

From the year 1992 onwards, the rates are only extracted from IMF annual report because the most updated rate recorded in World Currency Yearbook 1990/93 was the rate in 1991.

Started from 1996, the display information of IMF annual report was changed and no exchange rates were mentioned. Therefore, the most updated rates were in 1995.

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