Japan doesn't need the world's money; the country hasn't asked for charity to cope with the disaster.
But Japan did request another kind of help. Japanese authorities asked the world's biggest economic powers to start dumping the country's currency.
So in a rare move, as markets opened around the world today — first in Japan, then in Europe, then in North America — central bankers waded into currency markets and started selling yen.
Here's why Japan asked for help, and why the effort seemed to accomplish its goal.
1. A rising yen is bad for Japan.
A stronger, more valuable currency sounds like a good thing. But a rising currency makes a country's exports more expensive. So when the yen goes up, it's harder for Japanese companies (Sony, say, or Toyota) to compete in global markets.
For Japan, which is heavily dependent on exports, a stronger yen can cause huge economic damage.
2. The yen had been rising since the earthquake.
On any given day, "most of the buying and selling in currency markets is done by speculators betting on what's going to happen," Harvard economist Jeffrey Frankel told me this morning.
(Fundamental changes in the world economy do affect exchange rates; it's just that traders are typically the first people to react to those changes, according to Frankel.)
This week, traders were clearly betting that the yen was going to rise, though it was unclear exactly why they were making that bet, Frankel said.
One hypothesis: Japanese households and insurance companies will soon need yen to start paying for the disaster.
That would cause them to sell some of their foreign investments — U.S. Treasury bonds, for example — and exchange the proceeds for yen.
As in any other market, when people buy more yen, the price of yen goes up — in other words, the value of the yen rises.
For whatever reason, traders continued to buy yen, and the currency's rise gained speed yesterday. At one point the yen hit its highest value in more than 60 years.
The continuing rise could have been catastrophic for the country's exports. That could have sent Japan — the world's third-biggest economy — back into recession.
3. The solution to the problem: Sell!
Since the problem was too many people buying too many yen, the solution was clear: Central banks, which hold yen as part of their reserves, would start selling yen.
Thursday evening (Eastern Time), finance ministers and central bank governors from the world's seven biggest economies put out a statement. It said, in part:
In response to recent movements in the exchange rate of the yen associated with the tragic events in Japan, and at the request of the Japanese authorities, the authorities of the United States, the United Kingdom, Canada, and the European Central Bank will join with Japan, on March 18, 2011, in concerted intervention in exchange markets. As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability.
If you're a currency trader, here's what this message says: If you're betting that the value of the yen is going to keep rising, look out. You're about to get hammered.
The message got through. Within minutes of the announcement, the NYT notes, the value of the yen plunged, losing most of what it gained over the past week. Since then, it's been steady throughout the day.
Frankel said the move would probably be successful, putting a cap on the value of the yen, at least in the short term.
So Japan's leaders, who have more than enough to worry about at the moment, no longer have to worry about economic damage from a rising yen.
Side note: The return of the G-7
For years, the global economy was largely run by the G-7, the group of what were then the world's seven most powerful economies: U.S., Japan, Germany, the U.K., France, Canada and Italy.
But the huge changes over the past decade have led to the decline of the G-7, and the rise of the G-20 — a much larger group that includes rising powers such as China, India and Brazil.
Yet today's action is a reminder that the G-7 isn't entirely obsolete. As Bloomberg News notes, the G-20 is plagued by internal debates, and often can't act as quickly or decisively as the G-7.
"In a strange way this has all given the G-7 a rationale for existence for the first time in years," one expert told Bloomberg.