G-7 agrees to constrain dollar, surplus

WASHINGTON — The Group of Seven industrialized nations, warning against a further upswing of the dollar against the yen, joined hands April 27 in an attempt to check the U.S. currency’s rise and to keep Japan’s external surplus from increasing markedly.

If the dollar advances further, the G-7 nations’ top finance officials suggested in a statement issued after their one-day meeting that they are prepared to step into the currency market. “We agreed that exchange rates should reflect economic fundamentals and that excess volatility is undesirable,” they said in their statement.

“In this context, we emphasized the importance of avoiding exchange rates that could lead to the re-emergence of large external imbalances,” the G-7 finance officials said, alluding to the yen’s recent slide against the dollar and consequent global concerns about a possible resurgence of Japan’s trade surplus. The G-7 finance ministers and central bank governors confirmed the need to intervene in the event of a further rise in the dollar. “We agreed to monitor developments and to cooperate as appropriate in exchange markets.”

U.S. Treasury Secretary Robert Rubin, who chaired the G-7 meeting, told reporters: “I think it’s a good statement. It was carefully drafted and it speaks for itself.”

Speaking at a news conference after the G-7 meeting, Finance Minister Hiroshi Mitsuzuka said the ministers basically reaffirmed their Berlin accord on exchange rates.