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Fugitive or Orphan? The Shanghai Yen in the Early Days of the Sino-Japanese War, 1938-1939

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  • Takagi, Shinji

Abstract

We explore a phenomenon observed during the Second Sino-Japanese War in which the value of the Japanese yen in Shanghai fell below the official rate. Shanghai provided a parallel market in which yen could be traded indirectly against British pounds through the intermediation of the Chinese yuan. The implied yen-pound rate was broadly approximated by purchasing power parity (PPP) before a significant divergence from PPP emerged in favour of the pound. This likely reflected negative news that signalled, among other things, a prospective withdrawal of Japanese yen as occupation money, which meant that the parallel market would close.

Suggested Citation

  • Takagi, Shinji, 2026. "Fugitive or Orphan? The Shanghai Yen in the Early Days of the Sino-Japanese War, 1938-1939," AGI Working Paper Series 2026-04, Asian Growth Research Institute.
    • Handle: RePEc:agi:wpaper:02000262
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East

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