G7 countries agree on intervention to control yen rise Skip to main content

G7 countries agree on intervention to control yen rise

US Dollar v Japanese Yen

Last Updated at 18 Mar 2011, 14:00 GMT *Chart shows local time USD:JPY intraday chart
$1 buys change %
80.8950 +
+1.81
+
+2.29
Finance ministers from the G7 group of the world's richest nations have agreed to step into currency markets in a bid to control volatility in Japan's yen.
It is first time since 2000 that G7 countries have jointly intervened in currency markets.
Earlier this week, the yen hit its highest level since World War II against the US dollar, adding to fears over Japan's recovery.
The yen weakened to 81.44 against the US dollar after news of the plan.
The nuclear crisis in Japan, coming soon after a huge earthquake and tsunami devastated the coastline, has hit financial markets around the world, with many worried about the impact on the global economy.
Market reaction
The effect of the G7 decision was immediate as the Nikkei 225 index gained 2.7% on Friday to close at 9,206.75 points.
In Europe, shares also responded to the intervention. The UK's FTSE 100 index rose 0.4% to 5,721 and the benchmark German and French indexes were both higher.
"As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability," the G7 said in their statement.

Start Quote

In a globalised trading culture, trying to stand against the market is hard to sustain. ”
End Quote
"We will monitor exchange markets closely and co-operate as appropriate."
Meanwhile, the Bank of Japan injected an extra 3 trillion yen ($37bn; £23bn) into the markets on Friday in a bid to shore up confidence and ensure liquidity.
'Slow things down' The first intervention by the G7 nations comes after volatility in markets in the aftermath of the earthquake.
Japan's main Nikkei 225 index lost more than 16% on first two days of the week before recovering on Wednesday.
But just as the stocks were recovering, the yen hit its record-high sending them into a tumble once again.
Japan is the world's third-biggest economy and relies heavily on exports. A rise in the yen makes Japanese products less desirable abroad.
destroyed vehicles in Sendai A strong currency may hurt recovery prospects of some of Japan's biggest companies
Nissan has restarted work at one of its four car assembly factories, but others are struggling still. Carmaker Toyota has halted operations at its 12 main assembly plants in Japan.
Nissan and rival Honda each lose around 2bn yen in profit a day with the shutdowns.
Electronics manufacturers fared little better.
Sony opened one factory, which makes optical films used in liquid TV screens, and adhesives. Seven other plants, which make everything from Blu-ray discs to lithium batteries, remain closed.
'Slow things down'

Start Quote

It's completely different from last year [when] people were talking about currency wars and competitive devaluation”
End Quote
The nuclear and earthquake crises in Japan will cause a "major slowdown" in the airline industry, according to the International Air Transport Association.
It said airlines would not start to recover until at least the the last six months of the year.
Analysts say the G7 decision is likely to soothe nerves, though it may not have a drastic impact on the yen's value.
The intervention marks a turnaround from the situation last year, when there was much talk of countries trying to weaken their currencies to boost sagging economic growth.
"It's completely different from last year," said Masafumi Yamamoto, chief foreign exchange strategist at Barclays Capital in Japan.
"People were talking about currency wars and competitive devaluation. In that sense, it was very significant that speculative yen appreciation can be attacked by coordinated action."
G7 finance ministers had called for an emergency conference call to discuss how to deal with market volatility and the impact of a stronger yen on the global recovery.
While there was speculation that the group would give the go-ahead to Japan to intervene in the foreign exchange markets, analysts have been surprised by a co-ordinated intervention.
The G7 countries are the US, Japan, Germany, France, the UK, Italy and Canada.

http://www.bbc.co.uk/news/business-12781534

Comments

Popular posts from this blog

Chronology of the Press in Burma

1836 – 1846 * During this period the first English-language newspaper was launched under British-ruled Tenasserim, southern  Burma . The first ethnic Karen-language and Burmese-language newspapers also appear in this period.     March 3, 1836 —The first English-language newspaper,  The Maulmain Chronicle , appears in the city of Moulmein in British-ruled Tenasserim. The paper, first published by a British official named E.A. Blundell, continued up until the 1950s. September 1842 —Tavoy’s  Hsa-tu-gaw  (the  Morning Star ), a monthly publication in the Karen-language of  Sgaw ,  is established by the Baptist mission. It is the first ethnic language newspaper. Circulation reached about three hundred until its publication ceased in 1849. January 1843 —The Baptist mission publishes a monthly newspaper, the Christian  Dhamma  Thadinsa  (the  Religious Herald ), in Moulmein. Supposedly the first Burmese-language newspaper, it continued up until the first year of the second Angl

Thai penis whitening trend raises eyebrows

Image copyright LELUXHOSPITAL Image caption Authorities warn the procedure could be quite painful A supposed trend of penis whitening has captivated Thailand in recent days and left it asking if the country's beauty industry is taking things too far. Skin whitening is nothing new in many Asian countries, where darker skin is often associated with outdoor labour, therefore, being poorer. But even so, when a clip of a clinic's latest intriguing procedure was posted online, it quickly went viral. Thailand's health ministry has since issued a warning over the procedure. The BBC Thai service spoke to one patient who had undergone the treatment, who told them: "I wanted to feel more confident in my swimming briefs". The 30-year-old said his first session of several was two months ago, and he had since seen a definite change in the shade. 'What for?' The original Facebook post from the clinic offering the treatment, which uses lasers to break do

Is 160 enough? One Indian man's family

By Sumnima Udas , CNN October 31, 2011 -- Updated 0857 GMT (1657 HKT) Ziona, center, with his has 39 wives, 86 children and 35 grandchildren in rural Baktwang village, India. STORY HIGHLIGHTS One man in India is the patriarch of a family of 160 in rural India Ziona, who only goes by his first name, has 39 wives, 86 children and 35 grandchildren. Ziona's father, Chana, founded the Christian sect in Baktwang that promotes polygamy "I never wanted to get married but that's the path God has chosen for me" Mizoram, India (CNN) -- The world's population hits 7 billion this week, but Ziona, the patriarch of what may be the biggest family in the world, is not bothered. "I don't care about overpopulation in India ... I believe God has chosen us to be like this (have big families). Those who are born into this family don't want to leave this tradition so we just keep growing and growing," he says with a smile. Ziona, who only goes by his f