Global Economic Governance
and
Foreign Exchange Policy of Japan
Kiyoto IDO
Vice Chairman
Institute for International Economic Studies
Member Countries and Governments of Asian Forums
APEC
EAS
ASEAN
Brunei, Indonesia (※)
Malaysia, the Philippines
Singapore, Thailand, Vietnam
Laos,
Myanmar,
Cambodia
India(※)
Japan(※), China(※), Korea(※)
Australia (※),
US（※）
Canada（※）
New Zealand
ASEAN+3
Russia（※）
Papua New Guinea
Hong Kong, Chinese Taipei
Mexico（※）, Chile, Peru
(※): G20 members
Reference: Other G20 members are Argentina, Brazil,
France, Germany, Italy, Saudi Arabia, South Africa, Turkey,
UK, EU
1
History of Chinese and Japanese Currency Exchange Systems
China
-1978
1980
Used an official exchange rate for government-led planned trade
Accession to the IMF, introduction of foreign currency
convertible notes
1981
Introduction of a dual exchange rate system with an official
rate and a market rate
1994
Abolition of the dual exchange rate system and foreign currency
convertible notes
Unification of exchange rates / transition to a managed
floating exchange rate regime (dollar-peg system, in effect)
Establishment of the Shanghai Foreign Exchange Trading Center
Introduction of a foreign exchange concentration system
1996
Transition
to an Article 8 country of the IMF
IMF8条国へ移行（経常取引の自由化）
1996年
(liberalization of current transactions)
2001
Accession to the WTO
2005 (Jul 21) Transition to a “managed floating exchange rate regime based on
market supply and demand with reference to a basket of currencies”
Revaluation of the yuan by 2% from 1USD=8.28CNY to 1USD=8.11CNY
* Fixed exchange rate introduced, in effect, from July 2008.
Floating rate reintroduced after announcement of easing controls
on the yuan
2009
Lifting of bans on trade settlements in yuan
2009年
人民元による貿易決済の解禁
2011 (Aug.) Official lifting of ban on direct foreign investment in yuan
2011 (Oct.) Official lifting of ban on direct domestic investment in yuan
2015 (Aug.) Introduction of a renewed calculation method of the yuan’s central
parity rate against the dollar to devaluate the yuan
Japan
1949
1950
Decision on a fixed exchange rate of 1USD=360JPY
Introduction of a foreign exchange concentration
system
1952
Accession to the IMF
1955
Accession to GATT
1960
Introduction of yen exchanges and free yen accounts
円為替・自由円勘定の導入
1960
1964年
IMF8条国に移行
1964
Transition
to an Article, 8accession
country to
ofthe
theOECD
IMF
Abolition of the foreign exchange budget
1971 (Aug.) Nixon Shock
(Dec.) Revaluation of the yen to 1USD=308JPY
1972
Abolition of the foreign exchange concentration system
1973 (Feb.) Transition to a floating exchange rate
1980
Revision of the Foreign Exchange Control Law
(from a principally license-oriented regime to liberalization)
1984
Japan-U.S. Yen-Dollar Committee
Abolition of the “real demand rule” for futures transactions
1985
Plaza Accord
1998
Revision of the Foreign Exchange Control Law
(abolition of the authorized foreign exchange bank system,
full deregulation of foreign exchange transactions)
2
USD/JPY Exchange Rate (1971 to present)
（yen)
400
Nixon Shock
Plaza Accord
350
Carter's Dollar Defence
300
Louvre Accord
250
Abenomics
200
Rubin's "strong-dollar
policy"
Great East Japan
Earthquake
Lehman collapse
150
100
Japan's current account surplus expands
50
1USD=79 yen
0
1USD＝75 yen
1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
(Source) Federal Reserve, Institution for International Economic Studies
(Note) As of September 2, 2016
3
PPP and the Dollar-Yen Exchange Rate
350
（yen）
USD/JPY exchange rate (monthly average)
300
250
Purchasing Power Parity (CPI)
Purchasing Power Parity (PPI)
200
150
100
50
0
(Source) Consumer Price Index (CPI): Ministry of Internal Affairs and Communications of Japan; US Department of Labor; Producer Price Index (PPI): Bank of Japan, US
Department of Labor; USD/JPY exchange rate: Bank of Japan
(Note 1) Based on monthly average exchange rate for March 1973 (265.3 yen per US dollar)
(Note 2) As of July 2016
4
Trends in the Yen Real effective Exchange Rate (monthly)
160
150
140
130
120
2010 average＝100
The “nominal effective exchange rate” is obtained by
first calculating the weighted average (geometric
mean) of the yen's exchange rates against other
major currencies, using the annual value of Japan's
trade with the respective countries and regions as
weights. A base period is determined to convert the
weighted average into an index.
The nominal effective exchange rate is adjusted to
incorporate inflation rate differences to calculate the
“real effective exchange rate”.
Apr. 1995
150.75
（83.53JPY）
Dec. 1999
131.05
（102.61JPY）
Nov. 1988
123.69
（123.16JPY）
Jan. 2009
106.77
（90.35JPY）
Aug. 1986
117.77
（154.11JPY）
110
Jul. 2012
102.53
（78.96JPY）
Appreciation
100
Depreciation
90
Apr. 1990
92.71
（158.50JPY）
80
Aug. 1998
95.7
（144.76JPY）
Feb. 2002
100.6
（133.53JPY）
70
Sep. 1985
85.14
（1USD＝236.91JPY）
60
50
Jul. 2007
79.32
（121.56JPY）
Jul. 2016
82.56
（103.97JPY）
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
(Source) Bank of Japan
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