The Group of Seven has signaled it wants Japan to build a consensus before intervening in the foreign-exchange market, according to the nation’s former head of currency policy.
Members have indicated intervention “should be done in agreement with the G-7 as opposed to unilaterally,” Rintaro Tamaki, who was a vice finance minister until July and directed two of Japan’s three rounds of yen sales in the past year, said Thursday in an interview in Paris.
Tamaki was referring to language in an Aug. 8 statement by the G-7 that said officials will “closely consult” each other on currencies.
Tamaki’s comments indicate Japan may encounter opposition to further yen sales after acting by itself twice in the past 12 months.
Canadian Finance Minister Jim Flaherty said he was concerned about actions by Japan and Switzerland to stem gains in their currencies and that the topic will be discussed by G-7 policymakers, who met Friday in Marseille, France.
“There is a substantial consensus, at least among G-7 countries, that markets should determine foreign-exchange levels,” said Tamaki, 57, who is now deputy secretary general of the Organization of Economic Cooperation and Development. “It’s been a principle for a long time.”
G-7 members jointly sold the yen in March after the Great East Japan Earthquake. Tamaki also supervised the first solo intervention by Japan in six years last September. His successor, Takehiko Nakao, implemented a third round Aug. 4, his third day in the job. Last month’s tally of ¥4.51 trillion in yen sales was the biggest since 2004.
Against the dollar, the yen has soared 19 percent in the past two years, reaching a postwar high of 75.95 on Aug. 19.
The Marseille gathering marks the debut for Finance Minister Jun Azumi, who took office earlier this month. Azumi said before departing Tokyo that he would appeal to the group to appreciate his concern about excessive yen gains.
“I want to tell them that we are going to take bold action if there are excessive moves,” Azumi told reporters Friday.
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