G7 coordination stabilizes yen
A bank teller counts 10,000 yen.
JEREMY HOBSON: Now let's get to today's historic global rescue of the Japanese yen. Finance ministers from the G7 developed economies announced a plan to weaken the yen in order to help Japan's economy. The shares in Tokyo, by the way, on that news jumped almost 3 percent.
We're joined as we are each Friday by Chris Low, chief economist with FTN Financial. He's with us live from New York. Good morning.
CHRIS LOW: Good morning.
HOBSON: So first of all -- explain what's going on here with this global intervention for the Japanese yen.
LOW: Sure. Even before the earthquake, the Japanese yen was remarkably strong. And that's because investors have been buying Japanese assets mostly because Japan's banks managed to steer clear of the financial crisis. But because of the earthquake and the tsunami, it was expected Japanese would be repatriated foreign assets -- that is selling them. And buying yen in order to rebuild. And speculators have taken the yen to historic highs. What happened yesterday is that the Group of Seven has decided to intervene in the markets for the first time in 11 years in order to prevent the yen from strengthening further.
HOBSON: And the yen dropped on that news against other currencies, but Chris, do you think that this action by these central banks will be able to keep the yen lower for more that a few days?
LOW: Absolutely. When it was just the Bank of Japan intervening which was the case earlier this year, speculators basically scoffed. It's very hard for one central bank to fight the markets. But the seven together have an enormous amount of fire power. And investors are already backing away.
HOBSON: Chris Low, chief economist with FTN Financial in New York, thank.
LOW: You're welcome.