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G7 nations vow not to engage in currency wars
The Group of Seven big economies have pledged not to engage in currency wars in a bid to avert a potentially dangerous round of devaluations by central banks around the world.
A television screen shows Japan's PM Abe attending the lower house budget committee session. His aggressive policies to combat deflation and bolster growth have weakened the yen. Photo: Reuters
By Louise Armitstead, Chief Business Correspondent
11:08AM GMT 12 Feb 2013
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In a statement released this morning, leaders promised that their fiscal and monetary policies would “not target exchange rates.”
“We, the G7 Ministers and Governors, reaffirm our longstanding commitment to market-determined exchange rates and to consult closely in regard to actions in foreign exchange markets,” said the statement.
“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.”
Spelling out the fears that have been raised, particularly by Francois Hollande, the French president, the statement added: “We are agreed that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will continue to consult closely on exchange markets and cooperate as appropriate.”
Fears of so-called “currency wars” were sparked when Japan's new prime minister Shinzo Abe ordered the country's central bank to be more expansionary. Mr Abe is determined to force down the value of the yen in a bid to boost exports and in turn Japan's sluggish economy.
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The Bank of Japan has announced it will raise its inflation target to 2pc, while trying to reach that goal “at the earliest possible date” and phasing-in hefty government debt purchases.
Governor Masaaki Shirikawa will also be replaced by a more compliant successor when he retires in April.
Mr Hollande responded by calling for a weaker euro and urged the euro zone to set a mid-term target for its exchange rate.
The Group of Seven big economies have pledged not to engage in currency wars in a bid to avert a potentially dangerous round of devaluations by central banks around the world.
A television screen shows Japan's PM Abe attending the lower house budget committee session. His aggressive policies to combat deflation and bolster growth have weakened the yen. Photo: Reuters By Louise Armitstead, Chief Business Correspondent
11:08AM GMT 12 Feb 2013
20 Comments In a statement released this morning, leaders promised that their fiscal and monetary policies would “not target exchange rates.”
“We, the G7 Ministers and Governors, reaffirm our longstanding commitment to market-determined exchange rates and to consult closely in regard to actions in foreign exchange markets,” said the statement.
“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.”
Spelling out the fears that have been raised, particularly by Francois Hollande, the French president, the statement added: “We are agreed that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will continue to consult closely on exchange markets and cooperate as appropriate.”
Fears of so-called “currency wars” were sparked when Japan's new prime minister Shinzo Abe ordered the country's central bank to be more expansionary. Mr Abe is determined to force down the value of the yen in a bid to boost exports and in turn Japan's sluggish economy.
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18 Jan 2013
The Bank of Japan has announced it will raise its inflation target to 2pc, while trying to reach that goal “at the earliest possible date” and phasing-in hefty government debt purchases.
Governor Masaaki Shirikawa will also be replaced by a more compliant successor when he retires in April.
Mr Hollande responded by calling for a weaker euro and urged the euro zone to set a mid-term target for its exchange rate.
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