Financial leaders in the Group of Seven (G7) pledged on Friday to closely monitor markets due to recent volatility and reaffirmed their commitment to exchange rates, waving Japan’s concern over the yen’s recent sharp declines. .
The advanced economies of the G7 have an agreement that markets should determine exchange rates, that the group will closely coordinate exchange rate movements, and that excessive and disorderly exchange rate movements would harm growth.
Japanese officials said the deal gives Tokyo leeway, or even to intervene directly in the currency market to counter the yen’s sharp moves.
“We will also continue to closely monitor markets due to recent volatility. We reaffirm our foreign exchange commitments drawn up in May 2017,” the G7 financial leaders said in a statement released after two days of meetings ending on Friday.
Once celebrated for boosting exports, the weak yen has emerged as a source of concern for Japanese authorities as it inflates the already rising costs of importing fuel and raw materials.
Japanese Finance Minister Shunichi Suzuki told reporters last Thursday that Tokyo wanted the G7 to reaffirm its commitment to currency policy as the country struggles to stem the yen’s decline to two-decade lows.
The dollar’s wide rise has also sent the euro lower, adding to inflationary pressure in the region which is feeling the pressure of rising energy costs caused by the Ukraine crisis.
Source: CNN Brasil