Last Updated at 18 Mar 2011, 15:40 GMT *Chart shows local time
Finance ministers from the G7 group of the world's richest nations have agreed to step into currency markets in a bid to control volatility in Japan's yen. It is first time since 2000 that G7 countries have jointly intervened in currency markets.
Earlier this week, the yen hit its highest level since World War II against the US dollar, adding to fears over Japan's recovery.
The yen weakened to 81.44 against the US dollar after news of the plan.
The nuclear crisis in Japan, coming soon after a huge earthquake and tsunami devastated the coastline, has hit financial markets around the world, with many worried about the impact on the global economy.
The effect of the G7 decision was immediate as the Nikkei 225 index gained 2.7% on Friday to close at 9,206.75 points.
US shares rose 0.87% to 11,877, while shares in Europe also responded to the intervention.
The UK's FTSE 100 index rose 0.8% to 5,741 and the benchmark German and French indexes were both higher.
"As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability," the G7 said in their statement.
Meanwhile, the Bank of Japan injected an extra 3 trillion yen ($37bn; £23bn) into the markets on Friday in a bid to shore up confidence and ensure liquidity.
End Quote "We will monitor exchange markets closely and co-operate as appropriate."In a globalised trading culture, trying to stand against the market is hard to sustain. ”
'Slow things down' The first intervention by the G7 nations comes after volatility in markets in the aftermath of the earthquake.
Japan's main Nikkei 225 index lost more than 16% on first two days of the week before recovering on Wednesday.
But just as the stocks were recovering, the yen hit its record-high sending them into a tumble once again.
Japan is the world's third-biggest economy and relies heavily on exports. A rise in the yen makes Japanese products less desirable abroad.
Nissan has restarted work at one of its four car assembly factories, but others are struggling still. Carmaker Toyota has halted operations at its 12 main assembly plants in Japan.
Nissan and rival Honda each lose around 2bn yen in profit a day with the shutdowns.
Electronics manufacturers fared little better.
Sony opened one factory, which makes optical films used in liquid TV screens, and adhesives. Seven other plants, which make everything from Blu-ray discs to lithium batteries, remain closed.
'Slow things down'
It's completely different from last year [when] people were talking about currency wars and competitive devaluation”
The nuclear and earthquake crises in Japan will cause a "major slowdown" in the airline industry, according to the International Air Transport Association.It said airlines would not start to recover until at least the the last six months of the year.
Analysts say the G7 decision is likely to soothe nerves, though it may not have a drastic impact on the yen's value.
The intervention marks a turnaround from the situation last year, when there was much talk of countries trying to weaken their currencies to boost sagging economic growth.
"It's completely different from last year," said Masafumi Yamamoto, chief foreign exchange strategist at Barclays Capital in Japan.
"People were talking about currency wars and competitive devaluation. In that sense, it was very significant that speculative yen appreciation can be attacked by coordinated action."
G7 finance ministers had called for an emergency conference call to discuss how to deal with market volatility and the impact of a stronger yen on the global recovery.
While there was speculation that the group would give the go-ahead to Japan to intervene in the foreign exchange markets, analysts have been surprised by a co-ordinated intervention.
The G7 countries are the US, Japan, Germany, France, the UK, Italy and Canada.
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