Authorities will closely monitor foreign exchange markets and take appropriate action in line with the latest statement by the Group of Seven industrialized nations calling for exchange rates that will not lead to huge external surpluses, a top Finance Ministry official said May 1.

At a news conference, Vice Finance Minister Tadashi Ogawa stressed that the G-7, which groups the United States, Germany, Britain, France, Canada, Italy and Japan, agreed on the need to keep exchange rates at levels that would not lead to large external imbalances. The idea was included in the joint statement issued April 27 by the G-7 finance ministers and central bankers in Washington in addition to calls for exchange rates to be stable and to reflect economic fundamentals.

However, the yen continued to weaken against the dollar after the G-7 meeting, hitting a 57-month low in Tokyo trading May 1 as market players continued to test whether the G-7 would attempt concerted dollar-selling.

On the other hand, Ogawa welcomed movements in the stock market in which the benchmark Nikkei average of 225 selected issues exceed the 19,000 mark for two straight days, at one point April 29 hitting its highest level this year. “I think the fact that trading volume is increasing slightly and stabilizing is providing a greater sense of security (than stock prices), but I suppose the stock price reflects the confidence of investors,” he said.

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