Explain why japanese yen became stronger after earthquake

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Reference no: EM133000261

The graph below is the exchange rate of Japanese Yen to US dollar (¥/$) between January to June 2011. Shortly after March 11 earthquake and tsunami in Japan, the Yen hit 76.25, its' strongest since World War II.

Several days later in March 2011, the world's richest nations have carried out coordinated action in the currency markets to try to stabilise the Japanese yen. It is the first time since 2000 that G7 countries have jointly intervened in the currency markets. The yen weakened after the intervention, trading at 80.94 against the US dollar on 18 March.

Explain why Japanese Yen became stronger after the earthquake.

Explain how central banks of G7 countries intervened in foreign exchange markets? What was the government's justification for the intervention?Did the intervention succeed? Explain the reasons for your answer.

Reference no: EM133000261

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