The yen lost most of its value during and after the World War II. After a certain period of instability, the value was set to ¥360 per U.S. dollar. The currency was part of the Bretton Woods system, in an attempt to stabilize prices in the Japanese economy.

The second major crisis for Japan’s currency in 1971, when the yen had become undervalued. Japanese exports cost too little in the international markets, while imports from other countries became very expensive. The solution was a fixed exchange rate against the dollar, which lasted for three years, until nearly all major countries opted for floating exchange rate.

In the 1980s, Japan still wrestled with a weak currency, not least because of low interest rates in the country. This led to capital movement to countries with higher interest rate.