Endaka (円高, lit. high yen) or Endaka Fukyo (high yen recession) is a state in which the yen is high, or valuable compared to other currencies. Since Japan is highly dependent on exports, this can cause a recession. The roots of endaka began in 1971 with the Smithsonian Agreement. The term was coined with the first usage in 1985 during the Plaza Accord, in which the yen was revalued sharply overnight. However, the recession term was first used in 1992, when Japan's economy hit the skids, and again in 1995, when the yen hit an all time peak of 79 to the dollar, valuing Japan's economy slightly larger than the United States in nominal GDP. That made Japan the world's largest economy for just a few days, but significant in that it was the first time the US was dethroned since the US overtook the UK. Japan has struggled to keep its yen low to aid exporters, causing a huge rise in foreign exchange reserves. Subsequent nations copied this model, most notably China and other Asian nations. Since 2004, Japan has abandoned the interventionist model. Other Asian nations, most notably China but other, seemingly free-economy friends of America such as Singapore and Hong Kong, continue to manipulate their currencies.

The opposite of endaka is enyasu, meaning "inexpensive yen."

History

• 1971, Smithsonian Agreement, yen revalued from 360 to 308 per dollar.
• 1973-1977, energy crisis, yen weakened.
• 1978, yen strengthened to 180 per dollar, first endaka.
• 1979-1984, yen remained between 200-250 per dollar.
• 1985, Plaza Accord, revalued yen from 250 to 160 per dollar.
• 1986-1988, yen further strengthened to 120 per dollar, second endaka.
• 1989-1995, yen fluctuated between 100 to 160 per dollar.
• 1995, yen surged to all time peak of 79 per dollar, endaka fukyo.
• 1997, Asian Financial Crisis, yen fell to 147 per dollar.
• 1997-2004, BOJ fights yen appreciation, surging forex reserves, ballooning national debt, endaka fukyo.
• 2004 BOJ abandons active intervention, promotes yen carry trades.
• 2007-2008, Chinese yuan strengthening allows yen to rise, unwinding the carry trades, tipping off subprime crisis in US. Yen surges from 123 to 96 per dollar, beginnings of a new endaka fukyo.