The Group of Seven big economies, including the United States, Germany, France, the UK, Italy, Canada and Japan have pledged not to target exchange rates, G7 leaders said in their statement posted on the Bank of England’s website.
According to the statement, G7 member countries will keep exchange rates determined by markets. “We reaffirm that our fiscal and monetary policies have been and will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates,” the statement said.
Earlier reports from multiple sources claimed that G7 was planning to release a statement, where authorities would affirm their adherence to market-driven exchange rates. It was issued in response to increased worries about global currency wars that could have happened amid aggressive Japanese monetary policy.
Over the past few months, Japan has determined to force down the value of the yen as too strong national currency affects exporters’ foreign exchange earnings. From October 2012 the U.S. dollar rose against the yen from 77 to 93. The world's media reported that G7 nations were not to condemn currency interventions of Japanese government.
Currency wars issue was highlighted in Russia as well. In January at the Gaidar Forum the first deputy chairman of the Bank of Russia Alexey Ulyukaev said that the world stands on the verge of “serious confrontational actions” in relation to foreign exchange regulation. The former head of the Bank of England Mervyn King also mentioned potential currency wars among the major central banks in different countries.
Japan’s authorities openly declared their yen depreciation measures, alleging that Western countries strengthened the yen. China is also suspected in weakening its national currency to boost its exporters’ competitiveness.
