In a rare move, the Group of Seven industrialized nations agreed to intervene in currency markets in order to reduce and stabilize the value of Japan's currency, the yen, according to an announcement Thursday night.
The move is aimed at calming global markets, which have seen a "wild week of often panic selling" after a devastating earthquake and tsunami hit Japan last Friday, reports Reuters.
Central banks in the United States, Britain, Canada, Europe and Japan are going to sell yen into foreign exchange markets, Toronto's Globe and Mail reports.
“As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability,” the group said in a joint statement.
The G7 agreement reflects a rare instance when the world's major industrial nations make a coordinated intervention into the currency markets.The last time was in 2000 when the group of wealthy, industrialized nations intervened to stabilize the euro.
“I think there’s a very good argument that it’s in everyone’s interest to stabilize the Japanese financial system, and part of that effort is to stabilize the yen,” Jens Nordvig, an analyst with Nomura Securities, told the Times. “Normally it only happens when the currency is completely misaligned, and that condition is not in place here, but I think the extraordinary circumstances have made them go ahead and do it nonetheless.”
A strong yen would make it difficult for Japan's economy, which relies heavily on exports, to recover from its ongoing earthquake, tsunami and nuclear crisis. The cost of the damage is already estimated at up to $200 billion.
Markets responded to the announcement by driving down the value of the yen against the dollar, and Japan's Nikkei share index climbed 2.5 percent.
Read more from GlobalPost about the situation in Japan:
Japan: nuclear fears fray nerves (VIDEO)
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Japan nuclear fears spread to China
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-- Hanna Ingber Win