Group of 7 Takes Measures to Stabilize Japan’s Currency

Group of 7 Takes Measures to Stabilize Japan’s Currency

By BINYAMIN APPELBAUM
Published NY Times: March 17, 2011



The United States and other major economies will join Japan in a highly unusual effort to stabilize the value of the yen by intervening in currency markets, the Group of 7 nations announced Thursday night in a joint statement.

Markets responded immediately by driving down the value of the yen against the dollar, reversing almost a week of sharp increases. The Nikkei 225, the leading index of the Japanese stock market, also surged on the news.

The rising value of the yen threatened to undermine demand for Japanese exports at the same time that a series of disasters has damaged the domestic economy.

Japanese officials previously insisted that they wanted only moral support from other nations, but they requested and received additional help during a conference call of finance ministers and central bankers Thursday night.

In a statement expressing “solidarity with the Japanese people,” the Group of 7 nations said they would conduct a “concerted intervention in exchange markets” on Friday.

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

The Bank of Japan, the European Central Bank and the central banks of the United States, Britain and Canada will sell yen for other currencies, reducing its value and curbing speculation.

Weakening the yen would allow consumers in the United States and other countries to buy Japanese goods at lower prices.