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| Version 4 | Version 5 |
|---|---|
| G7 countries agree on intervention to control yen rise | G7 countries agree on intervention to control yen rise |
| (40 minutes later) | |
| Finance ministers from the G7 group of the world's richest nations have agreed to step into currency markets in a bid to control volatility in Japan's yen. | Finance ministers from the G7 group of the world's richest nations have agreed to step into currency markets in a bid to control volatility in Japan's yen. |
| It is first time since 2000 that G7 countries have jointly intervened in currency markets. | It is first time since 2000 that G7 countries have jointly intervened in currency markets. |
| Earlier this week, the yen hit its highest level since World War II against the US dollar, adding to fears over Japan's recovery. | Earlier this week, the yen hit its highest level since World War II against the US dollar, adding to fears over Japan's recovery. |
| The yen weakened to 81.71 against the US dollar after news of the plan. | |
| The G7 said that the member nations would "join Japan, on March 18, 2011, in concerted intervention in exchange markets". | The G7 said that the member nations would "join Japan, on March 18, 2011, in concerted intervention in exchange markets". |
| "As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability," the G7 said in their statement. | "As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability," the G7 said in their statement. |
| "We will monitor exchange markets closely and co-operate as appropriate." | "We will monitor exchange markets closely and co-operate as appropriate." |
| Meanwhile, the Bank of Japan injected an extra 3 trillion yen ($37bn; £23bn) into the markets on Friday in a bid to shore up confidence and ensure liquidity. | Meanwhile, the Bank of Japan injected an extra 3 trillion yen ($37bn; £23bn) into the markets on Friday in a bid to shore up confidence and ensure liquidity. |
| The G7 comprises the US, Japan, Germany, France, the UK, Italy and Canada. | The G7 comprises the US, Japan, Germany, France, the UK, Italy and Canada. |
| 'Slow things down' | 'Slow things down' |
| The first intervention by the G7 nations comes after volatility in markets in the aftermath of the devastating earthquake and tsunami in Japan. | The first intervention by the G7 nations comes after volatility in markets in the aftermath of the devastating earthquake and tsunami in Japan. |
| Japan's main Nikkei 225 index lost more than 16% on first two days of the week before recovering on Wednesday. | Japan's main Nikkei 225 index lost more than 16% on first two days of the week before recovering on Wednesday. |
| But just as the stocks were recovering, the yen hit its record-high sending them into a tumble once again. | But just as the stocks were recovering, the yen hit its record-high sending them into a tumble once again. |
| Investors were concerned a stronger yen will hit profits at some of Japan's biggest companies. | Investors were concerned a stronger yen will hit profits at some of Japan's biggest companies. |
| Analysts say the G7 decision is likely to soothe nerves. | Analysts say the G7 decision is likely to soothe nerves. |
| "There are three reasons that are going to make it effective: This is a joint market action, it is conspicuous in its timing and it is across currencies," said David Forrester of Barclays Capital. | "There are three reasons that are going to make it effective: This is a joint market action, it is conspicuous in its timing and it is across currencies," said David Forrester of Barclays Capital. |
| The effect of the G7 decision was evident as the Nikkei 225 index gained 2.7% on Friday to close at 9,206.75 points. | |
| However, analysts said that while the intervention will calm the markets, it may not have a drastic impact on the yen's value. | |
| "The move down in dollar/yen was quite sharp and, historically, intervention is designed to slow things down rather than mark a turning point," Mr Forrester said. | "The move down in dollar/yen was quite sharp and, historically, intervention is designed to slow things down rather than mark a turning point," Mr Forrester said. |
| Effective response | Effective response |
| G7 finance ministers had called for an emergency conference call to discuss how to deal with market volatility and the impact of a stronger yen on the global recovery. | G7 finance ministers had called for an emergency conference call to discuss how to deal with market volatility and the impact of a stronger yen on the global recovery. |
| While there was speculation that the group would give the go ahead to Japan to intervene in the foreign exchange markets, analysts have been surprised by a co-ordinated intervention. | While there was speculation that the group would give the go ahead to Japan to intervene in the foreign exchange markets, analysts have been surprised by a co-ordinated intervention. |
| "This is a huge surprise," said Fredric Neumann at HSBC. | "This is a huge surprise," said Fredric Neumann at HSBC. |
| He said the move was positive one as a co-ordinated effort by the biggest economies in the world would a have bigger impact than action by the Japanese central bank alone. | He said the move was positive one as a co-ordinated effort by the biggest economies in the world would a have bigger impact than action by the Japanese central bank alone. |
| "Markets may doubt the effectiveness of individual central banks' intervention," he said. | "Markets may doubt the effectiveness of individual central banks' intervention," he said. |
| "If several central banks step into the market in a co-ordinated fashion, it will undoubtedly have an effect." Mr Neumann added. | "If several central banks step into the market in a co-ordinated fashion, it will undoubtedly have an effect." Mr Neumann added. |