Japan in the International Setting

The past two years have witnessed serious disruptions in the international monetary and trade systems, and Japan has played a central role in these events. Japan's trade surplus has continued to expand over the past few years; in 1971 it became so large that Japan's foreign exchange reserves more than tripled in one year. The revaluation of the yen at the end of 1971 was intended to rectify this disequilibrium. But Japan's export surplus kept on increasing in 1972, and it led to another revaluation in February 1973 and the floating of the yen. In the course of a year and a half, the value of the yen rose from 360 yen per dollar to 260 yen per dollar.