G7 agrees to intervene against yen to help Japan recover

The Group of Seven industrialized nations has agreed to jointly intervene on the currency market to restrain the Japanese yen’s largest surge in the country’s post-war history and help Japan recover from a deadly earthquake and nuclear crisis, G7 Finance Ministers said late on Thursday.

“In response to recent movements in the exchange rate of the yen associated with the tragic events in Japan, and at the request of the Japanese authorities, the authorities of the United States, the United Kingdom, Canada, and the European Central Bank will join with Japan, on March 18, 2011, in concerted intervention in exchange markets,” G7 said in a statement.

“As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability.”

Bank of Japan Governor Masaaki Shirakawa said just after the G7 announcement that the Japanese regulator would promote powerful monetary easing and continue pumping more money into the banking system.

On Monday, the central bank doubled its asset buying pool set up last October to 10 trillion yen.

The yen’s sharp surge was driven by slower capital outflow as Japanese investors held back buying foreign assets, speculative bets on the yen strengthening and insurers’ repatriating capital to participate in the country’s reconstruction.

A 9.0-magnitude earthquake struck the east Japan coast last Friday, sparking a powerful tsunami. A series of aftershocks have since caused blasts and fires at the Fukushima nuclear power plant, raising fears of a nuclear meltdown and causing what Prime Minister Naoto Kan said was the toughest crisis since World War Two.

MOSCOW, March 18 (RIA Novosti)

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