G7 nations agree to stabilise Japanese yen

| March 18, 2011 | 0 Comments
G7 nations agree to stabilise Japanese yen

Finance ministers of the group of seven nations have agreed to intervene to stabilise the Japanese yen - which has reached record highs this week.

Earlier this week, the yen reached a post-war record high against the US dollar following last Friday’s earthquake and tsunami.

The disasters also sent global shares into freefall earlier this week but the worry for the world’s third largest economy is a strong yen, which continues to weaken demand for exports.

The currency has been steadily rising since last week’s 8.9 magnitude quake and led G7 finance ministers to discuss how to deal with global market volatility.

However, today’s news of the currency action has led to a rise in European shares.

London’s FTSE 100 index was up 0.5% to 5,722, while the benchmark German and French indexes both rose 0.8%.

Japan’s Nikkei 225 index closed up 2.7% following the G7 decision.

It is first time in more than a decade that G7 nations have collectively intervened in currency markets.

Analysts believe the action will calm markets.

In a statement, the G7 said: “As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability.

“We will monitor exchange markets closely and co-operate as appropriate.”

The G7 comprises the US, Japan, Germany, France, the UK, Italy and Canada.

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