Forex History Of Japan - Overview

The review of Japan’s forex history during the seventeenth and eighteenth centuries indicates that there was no action happening and a long period of isolation. The result of which was that there was not much demand of foreign currency trading during this period. The beginning of forex currency trading in Japan started when the industrialization was intimated in the year 1868 with Meiji Restoration. Thus the review of history of forex market in Japan also supports the fact that Tokyo’s foreign exchange market is younger as compared to its neighboring country Britain, which has London as the world centre of foreign currency trading.

The Tokyo Stock Exchange became apart of forex history of Japan on 15 May, 1878. Then it was introduced by the name of the Tokyo Kabushiki Torihikijo. However, the actual currency trading started only on June 1, 1878. Then a landmark in foreign currency trading history of Japan came in the year 1943 when ten different stock exchanges located in major cities of Japan were combined to the Tokyo stock exchange to form a single Japanese stock exchange. History of forex market in Japan also witnessed a very unfortunate incident that happened in Japan i.e. bombing of Nagasaki during World War II, as a result of which this combined exchange was shut down. However it was reorganized later on.

The World War II had a major impact on Japanese economy along with Japan’s forex market history and its currency Yen suffered a lot and lost its value. Then after a period of instability in 1949, it was decided to fix the value of the yen at ¥360 per USD, according to a plan suggested by the United States. This plan was a part of Bretton Woods System which was formulated in order to stabilize currency prices in the Japanese economy. Thais rate of exchange for yen remained same until 1971, when the United States abandoned the gold standard which was the basis of Bretton Woods System. However it was difficult to maintain the fixed rates in the face of supply and demand pressures in the foreign-exchange market. Therefore these fixed rates were abandoned later on and currency rates were allowed to float.

It is clear that many reforms introduced during the entire history of forex market in Japan to stabilize the forex currency trading. It is evident that these reforms have worked well and today despite many odds the Tokyo stock exchange is among the largest stock exchanges of the world and its currency Japanese Yen is also one of leading currencies being traded worldwide.