G7 To Stabilize Value Of The Yen
The New York Times reports:
WASHINGTON — The United States and other major industrial nations 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.
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 said earlier on Thursday that they could respond unilaterally and wanted only the approval of other nations, but they requested and received additional help during a conference call with finance ministers and central bankers on 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 group said in a joint statement.
It is the first time since 2000 that the Group of 7 nations has made a coordinated intervention into the currency markets, then to stabilize the euro. During the 1990s, the yen and the dollar were also the targets of similar coordinated interventions.
The governments of Japan, the United States, Britain and Canada, and the European Central Bank, will seek to reduce and stabilize the value of the yen by selling their own reserves of the Japanese currency for other currencies as necessary.
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