Currency Exchange

In English we use the dollar sign ($) to indicate that a numeric value represents dollars. In Japanese, the currency symbol is ¥; we pronounce this "yen". But the kanji for the currency symbol is actually 円, which is pronounced "en". In stores you will see prices indicated using this symbol, such as: 円3000, although you will also see ¥3000.

Notice that the number itself is written in our classic Arabic figures! You might find numbers written in Kanji, or even Hiragana, but most likely you will see Arabic characters. This is goodness.

Also note that you will never see fractions of a yen; that is, Japanese do not use decimal points in prices. This is because the value of a single yen is about as small an amount as can be useful. (NOTE: technically, the yen is divided into fractions called 'sen', but there are currently no coins or notes denominated in 'sen': these were removed from circulation in 1953.)

One of the jokes about the 'Ugly American' is they are always asking what a price is 'in real money'. Think about it: to the Japanese, yen are real money; it's dollars that are un-real.

Still, when you are buying something, it's comfortable to understand what the price means in familiar terms.

When you give a bank US dollars and ask for yen, the number of yen you get back depends on the current exchange rate. The exchange rate is a figure determined by the various central banks around the world, and it changes depending on how these organizations view the reliability of each currency: it's relative value.

Of course, the official exchange rate is a number that is used for currency conversions amongst banks. When you go to a local bank you will not get so favorable a rate. The official exchange rate is more accurately called the interbank rate, and I call the actual exchange rate you and I get the "effective exchange rate". Actually, the effective exchange rate will also include a fee that the bank charges you for the actual transaction. This rate, then, reflects the actual cost to you of the foreign currency (yen in our case) in terms of your familiar currency (the US Dollar).

Note that this discrepancy is not limited to banks. If you withdraw yen from an ATM, you are actually running a complex transaction that involves multiple banking and other financial organizations, each with their own computer systems, and one or more central clearing house(s). Each party gets a small commission for assisting in the transaction.

It's often more difficult to ascertain the true effective exchange rate for ATM transactions because the various receipts don't have all the information (the transaction might not be settled until a later time; in the meantime, the official exchange rate may have changed). You probably won't know your true effective exchange rate until you return home and look at your credit card statement(s).

On the left of this page we provide a simple currency exchange calculator to help you estimate what your purchases represent in US Dollars. Remember, these are estimates, but they are reasonably close. If you exchange dollars for yen, and plug in the dollar amount you paid and the yen amount you received, this calculator gives you the effective exchange rate for that transaction.

If you already know the effective exchange rate but just want to use the price converter feature, enter a '1' in the 'Dollars given' box and the number of yen per dollar in the 'Yen received' box, then click 'Calculate rate'. Once you have the rate, you can then key in a price in yen and you will see the dollar equivalent at this effective rate.

To find out the current official exchange rate, you can check out most newspapers, although the Wall Street Journal seems to have the most comprehensive coverage. Or, online, go to Google and in the search field type in something like: '100 dollars in japanese yen' (without the quotes) and Google will return the value as well as links to sites that can give you various exchange rates for the last 120 days and other interesting information. Remember, these are official exchange rates, and you will not get this rate if you go to a bank to exchange dollars.

One of the really interesting articles the Google search returns is the article on the Japanese yen in Wikipedia.

Another good site with a currency converter that uses the current bank rate.