Finance Minister Sadakazu Tanigaki said Tuesday the Group of Seven major nations agree that foreign-exchange rates should reflect economic fundamentals, and any G7 action will be based on that belief.
"The idea that foreign exchange should reflect economic fundamentals in a stable manner, and that necessary action will be taken to counter excessive speculation and overshooting, has been widely held by the G7," Tanigaki said at a news conference.
"I believe that this will be the basic idea whatever direction we decide to take," he said.
Tanigaki, who has said repeatedly the recent weakening of the dollar is unwarranted, said that to ensure that the U.S. economy's underlying strength is correctly gauged, the United States should work to fix its fiscal and current-account deficits.
"Foreign-exchange fluctuations are affected not only by economic fundamentals, but also by psychological factors," he said. Japanese monetary authorities have also repeatedly intervened in the foreign-exchange market recently to the tune of trillions of yen to stem a yen rise.
Work on the deficits could "change the sentiment," he said.