1.10 AM Tuesday, 23 July 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:15 05:38 12:28 15:52 19:12 20:35
23 July 2024

Japan sees possible forex debate at G7

Foreign currency exchange rates are seen in a bank in Budapest, Hungary. Members of the Group of Seven may discuss global currency adjustments during their next meeting in Rome on Friday. (REUTERS) 

By Reuters
Some nations may talk about exchange rates in discussions on the global economy when Group of Seven finance leaders meet in Rome this weekend, a senior Japanese Finance Ministry official said on Tuesday.

But the official told reporters he had no preset idea on what the G7 communique would say on currency moves.

Asked if Japan will take up currency issues at the G7 meeting, the official said: "That depends on how discussions on overall macroeconomic conditions develop."

Finance ministers and central bank governors from Britain, Canada, France, Germany, Italy, Japan and the United States are due to meet in Rome on Friday and Saturday as they try to find a solution to the deepening credit crunch.

Japan, like the United States, is in recession and can ill afford a rising currency, which puts an extra choke-hold on exporters that are cutting jobs and shuttering factories in the face of a global slump in demand.

Tokyo has let off verbal volleys against sharp yen rises, but so far Japanese officials have stopped short of saying they will intervene in currency markets, and many market players don't believe they will.

The G7 nations will agree to act promptly to support their economies hurt by the global financial turmoil, particularly on how best to make fiscal measures effective, the official said.

Fiscal sustainability would also be discussed as G7 members have become more alert to the issue of how to eventually unwind huge spending plans to stimulate their economies, he said.

"They won't say it aloud when they are striving to stimulate their economies, but each country is becoming very conscious about how to exit these policies," the official said.

US and European bond yields have risen on fears of huge debt issuance as policymakers dish out trillions of dollars in bailouts and fiscal stimulus packages to tackle recession.

Japan expects to hear from US Treasury Secretary Timothy Geithner the outlook for the US economy and what measures the nation is taking to tackle the crisis when he meets Finance Minister Shoichi Nakagawa on Friday on the sidelines of the G7 meeting, the official said.

Jitters over the plight of US and European banks have prompted risk-averse investors to hoard the yen, pushing it to a 13-1/2-year high of ¥87.10 against the dollar last month. The dollar has since regained some ground and stood around ¥91.50 on Tuesday.

The yen rally has hammered exports and pushed the world's No 2 economy deeper into recession, with big exporters such as Toyota Motor Corp and Sony Corp slashing jobs and cutting output to cope with a global slump in demand.

Japan has not stepped into the currency market since a 15-month yen selling spree that ended in 2004 in which it sold ¥35 trillion ($383 billion; Dh1.4 trillion) to prevent yen strength from snuffing out an economic recovery.

The Ministry of Finance sets foreign exchange policy, deciding whether and when to intervene, while the Bank of Japan implements it.