The New Zealand dollar rose about 2.5% against the Japanese yen after the Group of Seven nations announced they would intervene in the currency markets to drive the yen lower as Japan looks to deal with the effects of the devastating earthquake and Tsunami that hit the north east of the country last Friday.
Japanese authorities will buy dollar/yen in the market from 9 a.m. (12:00 a.m. GMT). Other central banks will act when their markets open, Noda said. He declined to comment on the size of Tokyo's intervention.
"When Japan is in such a state, it's extremely meaningful for G7 countries to cooperate and take coordinated action to stabilize financial markets," he said.
The rising yen has presented an extra challenge for the Japanese recovery, Karen Maley at Business Spectator wrote before the G7's decision:
This morning’s meeting comes after a tumultuous day of trading in foreign currency markets yesterday, which saw the yen surge by more than 4 per cent in less than an hour, to a record high of 76.25 yen to the US dollar.
The rise in the yen poses additional challenges to an economy that is already grappling with deflation, and which faces a contractionary shock after last Friday’s devastating earthquake and tsunami, which has disrupted electricity supplies across the country and caused many Japanese companies to temporarily halt production.
The latest rise in the currency dents the competitiveness of big Japanese corporates, which are heavily dependent on international exports, and for the Japanese sharemarket.