Tags: G7 | Exchange Rates | currency | devaluation

G-7 Says It Won’t Use Economic Policies for Exchange Rates

Tuesday, 12 Feb 2013 09:53 AM

The world’s major industrial nations said they won’t use economic policy to drive exchange rates as finance chiefs bid to soothe mounting fears of a currency war.

“We reaffirm that our fiscal and monetary policies have been and will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates,” the Group of Seven’s finance ministers and central bank governors said in a statement released  in London.

The stance is tougher than the G-7’s last joint comment on exchange rates in 2011 and marks an effort to avoid a 1930s-style spiral of retaliatory devaluations in which weak economies try to boost exports by driving currencies down. It follows an outbreak of concern that Japan’s latest bid to beat deflation is an outright attempt to weaken the yen, an allegation its government denies.

The G-7 also reiterated its traditional stance that members are committed to “market-determined” exchange rates and that “excessive volatility and disorderly movements” can hurt “economic and financial stability.”

The statement was released three days before finance chiefs from the Group of 20 hold talks in Moscow and with the yen having fallen about 14 percent against the dollar since mid- November to its lowest since 2010.

Abe Push

Driving the slide is a post-election push by Japanese Prime Minister Shinzo Abe for easier monetary policy to propel the world’s third-largest economy from 15 years of deflation and repeated recessions. That strategy has drawn words of warning from Canada to Germany as policy makers fret Abe is actively trying to weaken the yen, threatening their own exporters.

Japanese Economy Minister Akira Amari said Jan. 26 that the government’s focus is on reviving its economy and it is not pursuing a cheaper yen.

Japan is “absolutely not deviating from global standards,” Amari said. “I don’t comment on a foreign-exchange rate because it should be determined by the market. What we do is to implement policies.”


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The world’s major industrial nations said they won’t use economic policy to drive exchange rates as finance chiefs bid to soothe mounting fears of a currency war.
G7,Exchange Rates,currency,devaluation
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2013-53-12
Tuesday, 12 Feb 2013 09:53 AM
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