Now that Japan is under agony and the economic despair seems to be in minds of investors. Finance ministers from the G7 group of richest nations have agreed to step into currency markets in their utmost attempt to control instability in Japanese yen. After 11 years the G7 nations have joined hands in hands to arbitrate in currency market . A couple of days ago the yen hit its highest level since second world war against the U.S dollar. Analyst speculate the panic of a strong yen that will hamper Japan’s recovery.
Meanwhile in the Asian sector on Friday the yen weakened to 81.21 against the U.S Dollar after news of involvement plans by the G7. The G7 said that the member countries will be joining Japan on March 18, 2011 in intensive involvements in the exchange markets. In a statement by the G7 it stated, “As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability”. In the statement it also says that the richest nations at G7 that is USA, , Germany, France, UK, Italy and Canada will monitor exchange markets closely and cooperate as appropriate.
Meanwhile the Bank of Japan injected an extra 3 trillion yen that’s $ 37 billion US Dollars into the markets on Friday in a bit to speed up confidence and ensure liquidity. The first involvement by the G7 nations comes after instability in the markets after their response to aftermath of the catastrophic earth quake and tsunami in Japan.
Japan’s main Nikkei 225 index lost more than 16% on the first two days of the week before recovering on Wednesday. Despite the recovery of stocks, the yen hit its record high sending shock waves once again. Investors were anxious that a stronger yen will hit profit at some of japans biggest businesses. The economist however predict that G7’s decision will bring a sigh of relief to the Japanese economy and will control yen rise.