G7 agrees to curb runaway Yen
The Group of Seven rich nations on Friday agreed to join in rare concerted intervention to restrain a runaway yen, hoping to calm global markets after a wild week of often panic selling as Japan scrambled to prevent a meltdown at a nuclear power plant.
The U.S. dollar surged two full yen to as far as 81.49 yen, leaving behind a record low of 76.25 hit on Thursday. Japan’s Nikkei share index climbed 2.2 percent, recouping some of the week’s stinging losses as Japan reeled from an earthquake,
tsunami and the nuclear power plant crisis.
The G7 agreement to jointly intervene to sell yen was the first in a decade and came as a surprise to many in financial markets who had thought they would only give Japan a green light to go it alone.
Japan’s Finance Minister Yoshihiko Noda said the Bank of Japan had begun to sell yen at 0000 GMT and other central banks from the G7 would intervene as their markets opened.
“This is the first coordinated intervention that we have seen since 2000 so it’s going to have a very huge resonating effect on the market,” said Kathy Lien, director of currency research at GFT in New York.
“Because the only type of intervention that actually works is coordinated intervention and it shows the solidarity of all central banks in terms of the severity of the situation in Japan.”