Japanese Finance Minister Yoshihiko Noda (C) speaks to reporters announcing that finance ministers from the G7 group of top economies and central bankers will hold teleconference talks, at his office in Tokyo on March 17, 2011 after the yen surged against the US dollar in morning trading. The yen continued to surge in early Asian trade, hitting a new record high since World War II of 76.52 against the US dollar following Japan's disastrous earthquake and tsunami. AFP PHOTO / JIJI PRESS
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Japanese Finance Minister Yoshihiko Noda (C) speaks to reporters announcing that finance ministers from the G7 group of top economies and central bankers will hold teleconference talks, at his office Show more

G7 finance ministers to offer Japan a helping hand



Finance ministers of the G7, a group of industrialised nations, are expected to offer support to fellow member Japan today as the world's third-biggest economy recovers from its worst disaster since the Second World War.

The talks are taking place after the yen strengthened to a post-war high, propelled by speculation that Japan will repatriate billions of dollars of foreign cash to fund rebuilding efforts.

However, it appears unlikely the world's richest nations will step in to help stabilise the currency after last week's earthquake and growing nuclear crisis.

"It's possible that there may be a decision on co-ordinated action on currency markets, but my personal view is such intervention is tricky," said Alastair Newton, the managing director and senior political analyst of the Japanese bank Nomura.

"If Japan wants a weaker yen they will more likely have to take action themselves rather than working with the euro zone and the G7."

Instead, G7 ministers are expected to extend their support to the stricken country in the form of offers of practical assistance.

Yesterday's announcement of discussions helped to stem losses in Japan's stock market. It also helped to weaken the yen as expectations rose of global action to prevent the disaster from hampering the economy.

The yen had earlier risen to 76.36 against the US dollar as the disaster appeared to deepen. Japan intensified attempts to cool overheating fuel at the Fukushima Dai-ichi nuclear plant, one of the reactors struck by the tsunami following the earthquake.

It prompted concerns among some G7 politicians about whether the crisis was grave enough to drag some countries back into recession.

Christine Lagarde, the French finance minister, said on Wednesday that G7 discussions could include the possibility of buying Japanese bonds.

Japanese bond risk has soared following the turmoil.

"I don't see much danger of Japan's tragedy derailing the global economic recovery," said Mr Newton. "It will protract the lull in the Japanese recovery."

Japan has already been recovering from the financial crisis at a slow pace as its economy remains weighed down by hefty debts.

On Wednesday, UBS lowered its growth forecast for the country this year to 1 per cent from 1.5 per cent.

Further upward swings in the yen could squeeze margins for Japan's exporters. Exports provide a vital source of funding to the economy.

Kaoru Yosano, the economics minister, appeared to rule out joint G7 currency intervention or government purchases of shares. He told Reuters news agency yesterday Japan's markets were not destabilised enough for such action.

Domestic intervention by policymakers has so far led to the Bank of Japan providing 5 trillion yen (Dh233 billion) in stimulus as it concentrates on offering intraday cash to banks.

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Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

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