Japan says G7 agreed excessive foreign exchange moves undesirable

Japanese Finance Minister Yoshihiko Noda said on Friday that finance leaders from the Group of Seven nations agreed at a meeting that excessive and disorderly foreign exchange movements are undesirable.

Noda added that he believed he had gained the understanding of his G7 counterparts regarding Japan’s stance on currency market intervention during an informal dinner meeting.

“We did not discuss anything about the future, but I believe we’ve gained understanding on our basic stance,” Noda told reporters after the meeting.

Tokyo intervened in the currency market for the first time in six years on September 15 as the yen’s steady rise against the dollar threatened to derail Japan’s export-reliant recovery from its worst recession in decades.

Investors remain on full alert for further intervention by Japan as an unexpected drop in U.S. payrolls data pushed the dollar to a fresh 15-year low against the yen on Friday.

Noda said his explanation of Japan’s currency intervention did not draw any response from other G7 members, but added “various views” were exchanged on currency rate matters.

The G7 finance leaders agreed that currency moves should reflect economic fundamentals, and that emerging economies with current account surplus should move toward a more flexible currency system, Noda said.

When asked whether such emerging economies included China, Noda said: “It’s included.”

Currency tensions have risen to the top of the agenda for the IMF meetings as policy makers deal with a drive by many of the world’s economies to cap the strength of their currencies.

The United States and the European Union accuse China of keeping its currency artificially weak to promote exports, undermining jobs and economic growth in the West.

Japan takes a more hands-off approach and has repeated that a more flexible yuan will benefit China’s own economy by keeping inflation in check.
Source: Reuters