An exchange rate is the price for swapping one currency for another.
History's lessons for today's decisions ／ Calculate with Your Own Numbers
How many dollars is 10,000 yen? — Reading the strong/weak yen from your wallet
I heard that "the yen has weakened." What has changed for my 10,000 yen?
Strong & Weak Yen in 3 Minutes
1See it
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Yen you have ÷ Rate = Dollars you get
If $1 = 100 yen, then 10,000 yen is $100.
If $1 = 80 yen, then 10,000 yen is $125.
More dollars for the same 10,000 yen. This is a strong yen.
If $1 = 125 yen, then 10,000 yen is $80.
You get fewer dollars. This is a weak yen.
When the 'yen' number goes up, the yen's value goes down.
This is easy to get backwards.
A $10 item costs 1,250 yen when $1 = 125 yen.
The rate at the exchange counter is different from the one in the news.
These numbers are just a guide.
2In numbers
10,000yen
How many dollars you get for the same 10,000 yen changes with the rate.
10dollars
The price in yen for an item priced in a foreign currency.
3What would you do?
Before your trip, you hear on the news that the rate changed from '$1 = 100 yen' to '$1 = 125 yen'. Is the yen stronger or weaker?
Pick one
Stronger yen
It might feel like the yen got stronger because the number went up, but it's the opposite. For the same 10,000 yen, the dollars you get decrease from $100 to $80. This means the yen is weaker.
Weaker yen
That's right. When the 'yen per dollar' number goes up, the yen is weaker. You get fewer dollars for the same 10,000 yen.
The rate you get at the exchange counter is different from the one reported in the news. These numbers are just a guide.
4Read more
When to use When you see news about exchange rates. When buying items priced overseas. When considering the amount to exchange before a trip.
A single division
An exchange rate is the exchange ratio between currencies. Dividing the yen you have by the rate gives you the amount of foreign currency you will receive. According to the Bank of Japan's explanation, 10,000 yen is $100 if $1 = 100 yen, $125 if $1 = 80 yen, and $80 if $1 = 125 yen. A stronger yen means you get more dollars for the same 10,000 yen.
Get used to the direction
The smaller the rate number, the stronger the yen; the larger, the weaker. If the number in "1 dollar = X yen" goes up, the yen is weaker. This direction—the number goes up while the yen's strength goes down—is a source of misinterpretation. Use this calculation to adjust the numbers a few times and get used to it.
View from the buyer's side
Turning the same division into a multiplication gives you the yen price of an item priced in foreign currency. A $10 item is 1,000 yen if $1 = 100 yen, and 1,250 yen if $1 = 125 yen.
Reported rates and counter rates
The "1 dollar = X yen" rate reported in the news is the interbank exchange rate. The rate for individuals exchanging currency at a counter or making foreign currency deposits is a retail rate, which is different. The numbers in this calculation are a guideline and not the amount you will receive at the counter.
Try with your own numbers
If you change the numbers, it recalculates on the spot. The formula is written below.
Input value
Output value
Dollars to receive（Dollar）—
Yen price of that item（Yen）—
Formula Dollars to receive = Yen on hand ÷ Exchange rate (yen per $1). Yen price of item = Dollar price × Exchange rate.
In other countries
The way to read exchange rates is the same for any currency. For euros or pounds as well, dividing the yen you have by the rate gives you the amount you will receive. Under a floating exchange rate system, the rate is determined by market supply and demand, not decided unilaterally by anyone.
Bibliography
- What is a foreign exchange rate?Bank of Japan (Tell me! Nichigin)
- What are a strong yen and a weak yen?Bank of Japan (Tell me! Nichigin)
Related Lectures and Notes
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