No change in G-7 currency pact expected, Mitsuzuka says

Finance ministers of the Group of Seven industrialized nations will reaffirm their April agreement that exchange rates should reflect economic fundamentals and that excess volatility is undesirable when they meet later this week, Finance Minister Hiroshi Mitsuzuka said June 17.

Speaking to reporters, Mitsuzuka said he did not expect the upcoming finance ministers’ gathering, which will take place in Denver during the G-7 summit, to issue any new statement regarding foreign exchange rates. “A decision was made at the G-7 meeting of finance ministers and central bankers in Washington in April, and I suppose we’ll be reconfirming that” this week, he said.

In April, the G-7 finance ministers issued a statement that called for exchange rates that were stable and would not lead to a re-emergence of large external imbalances. In recent weeks, the yen-dollar exchange rate has been relatively unstable as Japan’s external surpluses show signs of rising once again.

The current account surplus for April was nearly double that of the same period last year and has raised the concern of trading partners such as the United States that Japan is becoming reliant on exports to buoy its economic recovery. Market participants say they are waiting to see what, if any, action the G-7 leaders might take concerning external imbalances when they convene at their annual summit.