TOKYO – The Bank of Japan pumped more cash into money markets Friday for the fifth day straight to respond to last week’s quake and tsunami, and expressed hopes that joint action by the Group of Seven nations will help prevent the dollar’s plunge.

By adding money to the banking system, the central bank hopes lending will meet the expected surge in demand for funds after last Friday’s earthquake and tsunami in northeastern Japan, which has killed more than 5,600 people. More than 9,500 people are missing, according to police.

The dollar recovered to 81 yen levels in early Tokyo trading after the G-7 action. It had plunged to an all-time low of 76.32 yen overnight before rallying back to about 78.90 yen. Even that level is way below the previous all-time low of 79.75 yen recorded back in April 1995.

Finance officials from the Group of Seven major industrialized countries agreed on coordinated currency intervention to support Japan’s economy – the first time the G-7 countries have jointly intervened in currency markets since the fall of 2000.

In a joint statement issued following emergency discussions, the G-7 officials said that the United States, Britain, Canada and the European Central Bank will join with Japan in a “concerted intervention” in currency markets.

Bank of Japan Gov. Masaaki Shirakawa expressed hopes the G-7 actions will help stabilize markets, and promised the Bank of Japan will continue to ensure ample liquidity.

The Japanese central bank pumped an additional 3 trillion yen ($37 billion) into money markets Friday to keep financial markets stable.

Earlier, the bank conducted emergency operations over the week that added 34 trillion yen ($420 billion) in short-term funds to the financial system. Flooding the banking system with extra money is expected to help meet the surge in lending.

 

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