Dollar Surges After G-7 Vows Joint Forex Intervention To Protect Yen
By KUNA
The US dollar jumped to the upper JPY 81 range in Tokyo on Friday after the Group of Seven (G-7) major industrialized nations pledged coordinated intervention in currency markets for the first time in more than 10 years to stem the yen’s surge against the dollar following the 9.0-magnitude quake and tsunami on March 11 as well as accidents at a disaster-hit nuclear plant.
Finance ministers and central bank governors from the G-7, Britain, Canada, France, Germany, Italy, Japan and the US held a nine-minute telephone conference Friday morning to discuss ways to stabilize the Japanese currency one day after the yen hit a record JPY 76.25 against the dollar, which could have a negative impact on the global economy.
The coordinated action by the G-7, which came at the request of the Japanese authorities, was the first since 2010, when they put up a united front to stem the euro’s decline.
After the announcement, the Japanese government and the Bank of Japan intervened in the currency market at 9 a.m. (0000 GMT), prompting the dollar surge more than two yen from a pre-intervention level.
“We express our solidarity with the Japanese people in these difficult times, our readiness to provide any needed cooperation and our confidence in the resilience of the Japanese economy and financial sector,” the G-7 said in a joint statement released after the conference.
The US, Britain, Canada and the European Central Bank will join with Japan in concerted intervention in exchange markets, they said.
“Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability. We will monitor exchange markets closely and will cooperate as appropriate,” the statement added.
As of 3:20 a.m. (0620 GMT), the dollar traded at JPY 81.77-82 compare with Thursday’s 5 p.m. quotes of JPY 78.84-94 in New York and JPY 79.21-22 in Tokyo.
Speaking to reporters after the G-7 talks, Finance Minister Yoshihiko Noda expressed Japan’s gratitude.
“At a time when Japan is in a difficult situation, it is extremely significant that G-7 authorities agreed to act in concert and cooperate for the stability of the markets,” said Noda.
The minister also stressed that excessive movements in exchange rates have a negative impact on the world economy and financial markets.
