US made billion-dollar move to support yen

NEW YORK, May 14 (AFP): The United States deployed $1.0 billion as part of a G7 intervention in foreign-exchange markets to tame the soaring yen after Japan's earthquake disaster, the Federal Reserve said yesterday. "The US monetary authorities intervened in the foreign exchange markets on one occasion during the first quarter, on March 18, buying $1 billion against Japanese yen," the Federal Reserve Bank of New York said in its quarterly report to the US Congress. The New York Fed had confirmed the intervention to sell yen on March 18, without disclosing its value. The day before, Japan and its economic allies announced they would intervene in world currency markets for the first time in a decade to calm turmoil sparked by the March 11 massive earthquake and tsunami, and subsequent nuclear crisis. The pledge came after emergency telephone talks by the Group of Seven nations in response to a surge in the yen, which threatened the Japanese economy's recovery prospects. The US intervention amount was split evenly between the Federal Reserve and the US Treasury, the New York Fed said. The coordinated G7 intervention was conducted by the foreign exchange trading desk at the New York Fed, operating in conjunction with Japanese monetary authorities, the European Central Bank and the monetary authorities of Britain and Canada, it said. In the three months that ended March 31, the dollar had depreciated 5.5 per cent against the euro but appreciated 2.5 per cent against the Japanese yen, the New York Fed reported. At the same time, the dollar weakened 3.7 per cent as measured by the Federal Reserve Board's major currencies index, in part because "US economic growth concerns increased" and markets expected the Fed to maintain ultra-low interest rates but anticipated a rate hike from the European Central Bank.