On March 11, Japan was hit by an earthquake and tsunami 9.0 in magnitude that killed thousands of people and left many more missing. This disaster created a chain of events that is heavily influencing people’s lives around the world.
The Japanese yen hit an all-time high right after the disaster. This rise in the yen is probably due to Japanese households and investors selling foreign currencies to buy yen after the tsunami. A stronger yen hurts the Japanese economy because consumers abroad have less buying power, making Japanese exports seem more expensive, therefore producing a decline in sales for Japanese manufacturers.
To combat this phenomenon, many nations have joined together in a coalition in hopes of decreasing the volatility of the yen. The nations involved are members of the G7, a group of seven industrialized nations whose finance ministers meet several times a year to discuss economic policy. The members are the United States, France, Germany, Italy, Japan, United Kingdom, and Canada. Through a combined effort, the G7 hopes to facilitate Japan to a faster recovery.
A more pressing issue facing the Japanese government is the potential meltdown of six nuclear reactors in Japan. A nuclear reactor contains water and nuclear fuel that create a controlled reaction that heats the water to 550 degrees Fahrenheit to generate electricity. When a natural disaster occurs, the nuclear reactors are designed to shut down the reaction and backup generators would then pump water into the reactor to cool the fuel. The problem caused by the earthquake and tsunami is that the backup generators do not have enough power to pump water through the reactor. So the fuel rods boil off the water and overheat, causing explosions like the ones at Reactors 1 and 3.
Right now, workers at the plants are pumping seawater into the nuclear reactors to prevent a complete meltdown which would release radioactive substances. Although the reactors seem to have stabilized by the seawater pumping, traces of radioactive iodine have been found in milk from a farm close to the plant in Fukushima as well as in tap water in Tokyo. The half life of radioactive iodine is short but if absorbed, the radioactive iodine may pose health risks to the human body.