Finance Minister Hiroshi Mitsuzuka and Bank of Japan Gov. Yasuo Matsushita will attend a meeting of the finance ministers and central bankers of the Group of Seven nations April 27 and call for a reaffirmation of an earlier agreement that foreign exchange imbalances have been corrected.
In the hope of stemming a further slide in the value of the yen against the dollar, the Japanese delegation to the gathering in Washington is expected to urge its counterparts to again support a February G-7 agreement stating they believe the weak dollar situation to have been corrected. That agreement also states that the seven nations will monitor the foreign exchange market and take steps against excessive movements.
The statement served to calm foreign exchange markets, which had been driving the yen lower against the greenback, but the Japanese currency earlier this month again depreciated to its lowest levels since August 1992.
On macroeconomic policy, Japan will attempt to allay concerns among the rest of the G-7 that its recovery might lose steam and that it might use external demand to keep the upturn going. There is also some fear that Japan’s current efforts to cut back on government spending to reduce its fiscal deficit could also decelerate the pace of recovery. “We intend to explain that tax reforms beginning in April, such as the rise in the consumption tax, will dampen economic growth temporarily, but that we expect the economy to continue to recover,” an international financial source in Tokyo said.