G7 members to set scope of yen intervention

Fri Mar 18, 2011 1:40pm EDT
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John McCrank

OSHAWA, Ontario (Reuters) - Canada's Finance Minister said on Friday it would be up to G7 members to decide the size of their market intervention to stabilize the Japanese yen, saying "we'll have to see" how successful action has been so far.

The Bank of Canada and the U.S. Federal Reserve on Friday joined earlier efforts by European authorities and the Bank of Japan after the G7 agreed late Thursday on a joint effort to reverse recent sharp gains by the yen and calm markets after Japan's devastating earthquake and tsunami and its unfolding nuclear crisis.

"The central bank governors and the ministers of finance all agreed that we would act co-operatively to defend the currency, which was being traded in a disorderly way and was challenging recovery in Japan," Flaherty told reporters.

"With respect to the scope of the action, that's for the participants to determine. We've had some discussions about that but they'll have to remain matters that are of concern to the participants, not public."

The yen fell on Friday after the G7 nations carried out the first co-ordinated intervention since 2000, and traders braced for what could be weeks of official action to drive the currency lower.

Flaherty was cautious about assessing the impact of the steps taken on Friday.

"With respect to the success of the intervention. We'll have to see how things proceed today in the various markets around the world."

The Bank of Canada sold yen to buy Canadian dollars, a spokesman said, but analysts said Canada's trade was likely less than $200 million and largely symbolic.   Continued...

<p>Canada's Finance Minister Jim Flaherty speaks to journalists on Parliament Hill in Ottawa March 2, 2011. REUTERS/Chris Wattie</p>