The Group of Seven is concerned about excessive moves in the Japanese yen, an official from a G-7 nation said, adding that investors misinterpreted an earlier statement on exchange rates.
The clarification spurred gains in the yen and came just hours after the world’s major industrial economies appeared to signal acceptance of a weaker Japanese currency so long as Prime Minister Shinzo Abe’s government didn’t actively pursue devaluation.
The G-7’s statement — which said nations “will not target exchange rates” — was crafted to highlight concern about Japan giving guidance on the yen, and the country will be in the spotlight when Group of 20 policy makers meet in Moscow in three days, the official said on condition of anonymity.
“The apparent volte face is a shock to all who read this morning’s statement as a green light to Japan to reflate its economy as long as measures did not directly involve targeting the yen,” said Gavin Friend, a foreign exchange strategist at National Australia Bank Ltd. in London. “Aside from the fact the G-7 has added to volatility and caused a sharp move higher in the yen, this won’t help Japan’s cause.”
The yen jumped versus the dollar, rising 1.3 percent to 93.07 per dollar at 11 a.m. in New York. It had previously pared gains as investors concluded the G-7 wasn’t standing in the way of a yen decline so long it was only a by-product of Abe’s effort to revive his economy through monetary stimulus.
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