1. With a natural disaster, why would we expect a country’s currency to weaken?

2. Why were the G7 so quick to intervene?

After the 2011 earthquake and tsunami that hit Japan, the yen strengthened considerably. That seemed illogical, because you would expect a country facing a disaster of such huge proportions to have a weakening currency. Not only was the economy seriously damaged, but the nuclear disaster added to the challenges for Japan. The yen strengthened on speculation that Japan’s foreign businesses would repatriate money to assist in Japan’s recovery. This led to a G7 intervention in order to make the yen’s movements orderly and to reverse the strengthening. This intervention was successful.