At the worst possible moment for Japan's economy, the yen has surged to all-time highs against the US dollar and other currencies. Finance ministers of the G7 group of leading economies discussed yesterday that how they might ease the situation, with market expectations. The French Finance Minister Christine Lagarde, who organised the discussions, said the aim was to "see how we can take part in their debt issues and how we can react on a financial level". 

The yen traded to 76.25 against the dollar during trading yesterday. Some of the funds held by Japanese households and businesses abroad in dollar, euro, sterling and other currencies now being sold and converted to yen to pay for reconstruction and repair work at home. Traders also said that speculation in advance of such moves had also driven the Japanese currency higher. An unwinding down of the yen "carry trade", where Japanese currency is borrowed at ultra-low interest rates and invested in higher-yielding Australian and New Zealand dollar funds has also contributed. The Bank of Japan yesterday morning offered emergency funds for a fourth consecutive day, offering ¥5 trillion to the banks, and a further ¥1trillion in the afternoon. On Monday the bank pumped ¥7trillion into the system. For all operations taking into account, the bank of Japan has offered a total of ¥55.6trillion in short-term funds in the past three days, helping to allay fears of a "credit crunch" and financial crisis to add to the natural and nuclear disasters. So holdings denominated in dollars and pounds and euros and rand are being repatriated. That means buying yen. And nobody is selling, so the price goes up.