G-7 fires currency warning shot; Japan sanguine
LONDON (REUTERS) - Fiscal and monetary policies must not be directed at devaluing currencies, the Group of Seven (G-7) nations said on Tuesday in a statement Japan said gave it a green light to continue efforts to reflate its economy.
The intervention follows a round of rhetoric about a currency war, prompted largely by Japan's new government pressing for an aggressive expansion of monetary policy, which has seen the yen weaken sharply as a result.
The G-7 powers - the United States, Britain, France, Germany, Japan, Canada and Italy - reiterated their commitment to market-determined exchange rates, saying they would consult closely to avoid disorderly and volatile market moves that could hurt economic and financial stability.
"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," said the G-7 statement, released by Britain which chairs the Group of Eight (G-7, plus Russia) forum this year.