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The latest meeting of financial officials from the Group of Seven industrial nations went nowhere as far as exchange rates are concerned.

Market players found little to celebrate in the outcome of the weekend’s meeting in Washington.

During talks with his Russian counterpart after the G7 meeting, Finance Minister Masajuro Shiokawa reportedly predicted the yen will remain locked within a narrow range between 130 and 135 to the dollar in the near term.

But his remarks have gone largely unheeded on the currency market.

In the statement issued after their meeting, the finance ministers and central bank governors reiterated for the third time since Sept. 11 that “the G7 will continue to monitor developments in exchange markets and cooperate as appropriate.”

Lingering worries over the world situation apparently kept the G7 from returning to its previous favorite expression — “exchange rates should reflect underlying economic fundamentals.”

On the international political front, fears are intensifying of contagion from the tensions in the Middle East to the Philippines and elsewhere, while at the same time moves are well under way in Afghanistan to select a transitional government.

Against the backdrop of continuing international political unrest and the bloated U.S. current account deficit, many fear the dollar may face fresh selling pressure.

There is talk that European participants raised the issue of the U.S. trade deficit at the G7 meeting.

Ironically, however, U.S. financial markets are continuing to attract foreign investments, adding to the U.S. current account deficit.

It’s anybody’s guess whether the dollar will ever be spurned on currency markets.

Should Prime Minister Junichiro Koizumi’s administration become a lame-duck government and the Tokyo stock market’s benchmark Nikkei average plunge below 10,000, the yen could come under severe selling pressure against the dollar.

Actually, however, few market participants fear this scenario or other potential downward pressures on other key currencies.

The dollar will probably move between 128 yen and 132 yen through April and beyond.

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