It will take some time for the foreign exchange market to fully understand the significance of the statement issued May 4 by the finance ministers and central bankers of the Group of Seven, Finance Minister Hiroshi Mitsuzuka said April 30.
Speaking at a news conference, Mitsuzuka said the statement, which says that exchange rates should reflect economic fundamentals and that excess volatility is undesirable, will sink in gradually. The response came after the yen continued to depreciate against the dollar in Tokyo trading as dealers remained unconvinced whether the G-7 would put up a united front to stop the greenback from strengthening further. “It may take some time, that can’t be helped,” Mitsuzuka said.
The G-7 statement says Japan aims to avoid a significant increase in its external surplus. Mitsuzuka said he believes this refers to the balance of goods and services trade, rather than the overall current account surplus.
He added that his counterparts expressed “understanding” over Japan’s determination to reduce its fiscal deficit. There are no conditions linking fiscal reconsolidation efforts with keeping the nation on its path of economic recovery, he said.