“In response to recent movements in the exchange rate of the yen associated with the tragic events in Japan, and at the request of the Japanese authorities, the authorities of the US, the UK, Canada, and the ECB will join with Japan, on March 18, 2011, in concerted intervention in exchange markets,” said the G7 statement. While the news has been highly effective in reversing the strength of the yen, it is just a one day act for now. With this said though, coordinated intervention has historically been much more effective than unilateral action in having a longer lasting impact. Buying the euro in Sept 2000 was the last time we’ve seen such a G7 move. Then, the euro immediately spiked, then fell to new lows one month later but has of course risen steadily ever since. An aside, China followed India’s rate hike with another rise in reserve requirements to quell inflation.
